G-20 Leaders Divide on Currency Plan; World Markets Focus on Earnings

Bikram Pandey
22 Oct, 2010
New York City

U.S. stocks held their recent advances as deal activities heat up. American Express, UPS, Amazon and Nestle, SanDisk and Schlumberger reported rising earnings. All members of the European Union reported budget deficit in 2009. The dollar slides as G-20 financial leaders conclude currency talks.

[R]4:40 PM New York – U.S. stocks held their recent advances as deal activities heat up. American Express, UPS, Amazon and Nestle, SanDisk and Schlumberger reported rising earnings. All members of the European Union reported budget deficit in 2009. The dollar slides as G-20 financial leaders conclude currency talks.[/R]

U.S. stocks traded sideways but large cap stocks declined. The dollar continued its slide as world leaders conclude currency talks. AIG, GE and Caterpillar announce deals.

AIA raised $17.9 billion through a public offering in Hong Kong. HP acquired ArcSight for $43.50 per share. Caterpillar and GE acquire companies. American Express net surges 70% and Schlumberger earnings soar more than double.

G-20 financial leaders failed to agree on a process or a plan to lower world financial imbalances. The U.S. proposal to limit current account deficits to a certain level of the economy divided the participants.

The U.S. Treasury Secretary Timothy F. Geithner proposed countries limit a surplus or a deficit below 4%. The proposal was not welcomed by Japan, China and Germany, three other large exporters but with current account surpluses. U.S. has current account deficit of 3.2% but Russia runs 4.7% surplus. UK and Canada are also running large current account deficits.

The leaders talked world financial imbalances as developed nations struggle with economic decline and elevated unemployment and developing nations attract large fund flows and face the prospect of elevated asset prices and economic overheating.

American Express traded lower and reported quarterly net soared 71%. Amazon.com quarterly sales rose 39%. China based search engine said quarterly net more than doubled. United Parcel Service, Inc quarterly net soared 81%.

The European indexes declined after euro-zone consumer confidence remained flat in October. German building industry orders rose in August and business confidence rose unexpectedly in October. Ericsson net more than tripled and Volvo swung to profit.

The UK indexes fell after miners led the decline. Ireland with 14.4% registered largest budget deficit in the European Union in 2009. MasterCard completed acquisition of DataCash. Betfair priced IPO at 1,300 pence per share. State Street unit agreed to acquire Bank of Ireland Asset Management. BSkyB profit soars.

Japanese stocks gained on better-than-expected earnings outlook and a drop in jobless claims in the U.S. Japan takes stock of local rare earth inventory and prepares to sign agreement to develop these products with Vietnam. JFE Holdings swings back to profit in the first half of the current year.

Stocks in China dropped led by financials offsetting gains in the automotive and industrials. Retail sales grew 19% while pace of industrial growth, infrastructure spending and profits at state-owned enterprises slowed in September.

Mumbai benchmark index closed lower on Friday but gained 0.2% for the week. Coal India offering is oversubscribed fifteen times. Infosys plans to invest $100 million in China expansion.

Australian shares traded sideways but gained marginally. A wind farm project in Victoria to generate 248 megawatts gets approval. BG Group and Santos win approval for the first project to extract natural gas from coal seams in Queensland.

Commodities, Bonds and Currencies

Yields on 10-year bond increased to 2.56% and on 30-year bonds added to 3.94%.

The U.S. dollar fell to $1.397 to a euro and rose against the Japanese yen to 81.35 yen.

Immediate futures prices of Texas crude oil increased $1.33 to $81.89 a barrel, for natural gas added 1.33 cents to $3.33 per mbtu and gasoline prices increased 3.15 cents to 207.25 cents a gallon.

In metals trading, copper prices increased 2.55 cents to $3.81 per pound, gold decreased $2.10 to $1,327.70 per ounce and silver fell 10 cents to $23.24.