U.S., World Markets Indexes Up 2%; Fed Discloses Crisis Data

Bikram Pandey
01 Dec, 2010
New York City

U.S. and European markets closed up more than 2% after U.S. private sector hiring expanded and manufacturing continued to rebound. The euro and European markets gained after the European Central Bank stepped up its Irish and Portuguese bonds buying.

[R]4:00 PM New York – U.S. and European markets closed up more than 2% after U.S. private sector hiring expanded and manufacturing continued to rebound. The European Central Bank stepped up its Irish and Portuguese bonds buying. Fed disclosed the names of participants in its various loan programs at the time of financial crisis in 2008.[/R]

U.S. stocks advanced after private sector employment expanded in November, third quarter productivity was revised higher and manufacturing index showed a healthy expansion. Investors were also heartened after European central banks voiced strong commitments to euro and accelerated the purchase of Irish and Portuguese bonds.

The Federal Reserve disclosed the names of participants who sought and received access to loans during the time of crisis in 2008. The 21,000 transactions included various government programs that lent money and asset purchase from corporations and more than $1 trillion in U.S. housing debt.

Bank of America, Wells Fargo, U.S. units of USB, Societe Generale, Dresdner Bank. General Electric’s finance unit accessed Fed 12 times and borrowed $16 billion for commercial paper operations.

The lending program data released today shows the severity of the crisis and how deep it touched to some of the largest corporations that relied on the Fed to make weekly payrolls and pay other expenses. The Fed left its commercial paper lending facility open for more than six months into the summer of 2009 and lent as much as $3 trillion.

Goldman Sachs relied in the Fed 52 times and borrowed $590 billion at the time of the crisis, despite its assertions in the media after the crisis that the investment bank was strong enough at the time.

The Fed stressed in the documents released on its Web site that the companies that borrowed money under its commercial program did not face intrinsic business problems beyond the liquidity crunch in 2008.

Indexes in European region rose sharply after Portugal completed the sale of Treasury bills. The sentiment improved after positive comments from the ECB officials. Euro area manufacturing activities improved in November and German retail sales rose in October.

UK indexes closed higher after commodities rose after China reported manufacturing expansion. Home prices fell in November. Rolls-Royce won $420 million order from Hawaiian Airlines. Thomas Cook plunged after it reported sales decline of 4% and annual net loss.

Japanese stocks gained and the yen rose. Domestic auto sales drop 31% in November from a year earlier as customers held back after the expiry of one-time government subsidy. October steel shipments declined 0.6% from a year ago.

Indexes in Shanghai and Hong Kong closed higher after the manufacturing expanded. Shanghai real estate volumes surged 50% from a year ago but prices were flat. October retail sales in Hong Kong soared 22% from a year earlier.

Sensex Index in Mumbai soared after the latest read on manufacturing showed a robust expansion. October exports rose at a faster pace than imports. Manganese Ore Limited IPO is oversubscribed 29 times.

Stocks in Australia stayed little changed after third quarter GDP expanded little. Rio Tinto plans a further investment of $1.2 billion in Pilbara to increase iron ore output. Australian employers face rising wage pressures and consumers worries expensive utilities.

Commodities, Currencies and Yields

Dollar edged down against euro to $1.31 and rose against the Japanese yen to 84.26. One UK pound fetched $1.5588.

Crude oil increased $2.49 to $86.60 a barrel for a front month contract, natural gas edged lower 10 cents to $4.28 per mBtu and gasoline increased 10.54 cents to 229.22 cents.

Gold increased $4.10 in New York trading to close at $1,390.20 per ounce, silver increased $0.19 to $28.40 per ounce and copper for the front month delivery increased 11.50 cents to $3.94 per pound.

Yield on 10-year U.S. bond increased to 2.95% and on 30-year U.S. bond yield increased to 4.21%.