Weak Dollar, September Rally; Protests in Europe

Bikram Pandey
29 Sep, 2010
New York City

U.S. indexes rebounded from their lows of the day but the dollar declined and commodities and gold advanced. The rally in indexes this month is still the largest September since 1939. Energy complex stocks gained after crude oil increased to the two week high.

[R]4:00 PM New York – U.S. indexes rebounded from their lows of the day but the dollar declined and commodities and gold advanced. The rally in indexes this month is still the largest September since 1939. Energy complex stocks gained after crude oil increased to the two week high and tech stocks gained on positive comments from Hewlett Packard.[/R]

U.S. stocks fell after mortgage refinance applications declined. This month rally is still the best September since 1939 as worries about the euro receded. Gold and silver and crude oil continued their advances.

Liberty Mutual Holding Company postponed the public offering of its group company that was expected to raise $1.3 billion in the largest offering for 2010. Northrop Grumman won $2.6 billion Homeland Security contract and Boeing received contract from the U.S. Navy valued at $5.3 billion.

American Greetings plunged more than 11% after it reported revenues and profit decline. Family Dollar Stores, Inc after fiscal fourth quarter sales increased 8%. Green Mountain Coffee Roasters Inc. plunged 15% after the SEC opens investigation.

The European indexes slid after euro-zone economic confidence rose in September but protests mount in the region as Spain, Greece and other peripheral nations in the European Union region contemplate to put austerity measures.

The EU proposed tougher sanctions on budget offenders. German inflation accelerated and French consumer sentiment climbed in September. Romania central bank retained key rate at 6.25%.

The UK indexes pared gains after mortgage approvals fell in August. The UK productivity growth rose in the second quarter, services output improved in July, and gross mortgage lending remained flat in the month. British Airways agreed to launch transatlantic joint business with American Airlines and Iberia.

Japan indexes staged a minor rally after a quarterly survey of business sentiment among large corporation showed improved sentiment. However the plans for capital expansion are less than expected and the sentiment is expected to turn negative in the next quarter. China said it will start accepting applications for export of rare earths.

Stocks in Shanghai traded marginally lower and in Hong Kong gained more than 1%. ADB reaffirmed that Chinese economy will expand 9.6% in the current fiscal year. World’s fastest train starts trial run between Shanghai and Hangzhou.

Stocks in Mumbai traded lower after the rupee surged to new high for the year and a regional court ordered the closure of copper plant run by Sterlite Industries. The debt heavy ADAG business group looks to raise funds through public offering and stake sale. Asian Development Bank lifts India growth target to 8.5%.

Australian dollar advanced and inched closer to parity with the U.S. dollar, the largest monthly gain since May 2009. Sales of new homes fell for the fourth month in a row. ASX CEO plans to step down next year.

Commodities, Currencies and Yields

Dollar edged lower against euro to $1.36 and fell against the Japanese yen to 83.64. One UK pound fetched $1.578.

Crude oil decreased $1.73 to $77.91 a barrel for a front month contract, natural gas edged higher 0.01 cent to $3.96 per mBtu and gasoline increased 4.55 cents to 199.35 cents.

Gold increased $2.10 in New York trading to close at $1,310.40 per ounce, silver gained $0.22 to $21.93 per ounce and copper for the front month delivery increased 2.25 cents to $3.65 per pound.

Yields on 10-year U.S. bonds increased to 2.50% and on 30-year U.S. bonds yields edged up 3.69%.