World Markets Rise; U.S. Bonds Yields Worries

Devan Biswas
13 Sep, 2010
New York City

U.S. stocks closed higher on better than expected economic data from China. Crude oil gained more than 0.8% and the dollar edged lower against most currencies. Banks in Europe are preparing to raise more capital. The yield on 10-year U.S. bonds may decline below 1.8%.

[R]7:00 PM New York – U.S. stocks closed higher on better than expected economic data from China. Crude oil gained more than 0.7% and the dollar edged lower against most currencies. Banks in Europe are preparing to raise more capital. U.S. Treasuries yields on 10-year bonds may decline below 1.8%.[/R]

U.S. stocks trade higher after sharply higher industrial production and consumer demand in China. Industrial production in India also surged. The Basel Committee unveiled tighter guidelines for bank capital reserves but gave banks more than expected time to meet the revised capital guidelines.

Banks traded higher after watered down Basel III will take longer than expected to implement stricter capital guidelines. ArcSight Inc soared nearly 25% after it agreed to be acquired by Hewlett Packard. Tower Watson & Co declined on a planned offering.

Hertz and Dollar Thrifty and LabCorp and Genzyme Genetics agreed to merger.

Bond investors are facing dropping yields as the Fed prepares to buy more Treasury debt. The yields on 10-year Treasuries dropped 5 percentage points and may fall below 1.8% yield from the current 2.72% according to a research note from Bank of America.

Crocs, Inc, the footwear maker reiterated third quarter earnings outlook. K12 Inc said fourth quarter sales increased 22.4%. TRC Companies, Inc, the management consultant fourth quarter revenues increased 1.1%.

The European indexes soared after the ECB lifted the euro-zone 2010 GDP growth to 1.7%. The Basel Committee unveiled tighter guidelines for bank capital reserves. French current account deficit shrank in July.

The UK indexes gained after mortgage lending rose modestly in July. BAE Systems contemplated sale of platform solutions business. BP acquired interest in South China Sea. PZ Cussons plc advanced 1.8% after it reaffirmed annual outlook.

Stocks in Japan gained for the third trading day in a row after China reported better than expected economic data. Japan launched global positioning satellite. Incubator Bank of Japan resumes operations at select branches. Tepco plans to invest in Japan Nuclear Fuel to recycle spent fuel.

Larger than expected industrial production increase in China and sustained consumer demand in August lifted stock indexes in Hong Kong and Shanghai. Industrial production increased 13.9% and retail sales surged 18.4%. However, inflation perked up to 3.5%. Crude processing declines for the third month in a row in the month.

Stocks in Mumbai gained for a fifth day and surged more than 20% since late May. The sharp gain in industrial production and improving sentiment in Asian trading also contributed to the sentiment. PowerGrid scheduled its $3.5 billion IPO in November.

Stocks in Australia gained after a positive economic data from China and the Australian dollar gained to a 4-month high of 93.42 U.S. cents. Rio Tinto seeks permission to expand bauxite operations in Queensland. The number of LNG floating projects in the northern waters is expected to surge.

Commodities, Currencies and Yields

Dollar edged lower against euro to $1.28 and fell against the Japanese yen to 83.64.

Crude oil increased $0.81 to $77.26 a barrel for a front month contract, natural gas edged higher 0.07 cent to $3.95 per mBtu and gasoline increased 0.92 cents to 198.23 cents.

Gold decreased $0.50 in New York trading to close at $1,246.50 per ounce, silver added $0.27 to $20.12 per ounce and copper for the front month delivery gained 8.00 cents to $3.48 per pound.

Yields on 10-year U.S. bonds decreased to 2.72% and on 30-year U.S. bonds yields edged down 3.83%.