U.S. Economy Gathers Momentum; Oil Tops $91

Bikram Pandey
23 Dec, 2010
New York City

U.S. indexes drifted ahead of Christmas holiday as more evidence emerged that the economic recovery takes a early hold. The latest data on personal income and core durable goods orders showed a rising trend. Ireland is set to inject $5.2 billion after it seized Allied Irish Banks Plc.

[R]4:00 PM New York – U.S. indexes drifted ahead of Christmas holiday as more evidence emerged that the economic recovery is gathering a momentum. The latest data on personal income and core durable goods orders showed a rising trend. Ireland is set to inject $5.2 billion after it seized Allied Irish Banks Plc. China FDI is set to increase 11%.[/R]

U.S. indexes drifted after jobless claims edged lower and durable goods declined more than expected and personal income rose. Though the overall orders declined, orders excluding transportation and defense, rose and yet another confirmation that the slow economic recovery is gathering momentum.

Jo-Ann Stores agreed to be acquired by Leonard Green for $1.6 billion and Zimmer agreed to acquire Geneva-based Sodem Diffusion. Airgas Inc will have to explain to a court in Delaware why it rejected the revised $70 a share offer from Air Products & Chemical Inc.

Bed Bath third quarter sales increased 11.1% and comparable sales rose 7%. Christopher & Banks third quarter net sales edged lower 8.4% to $120.9 million. Jo-Ann Stores agreed to be acquired by Leonard Green for $1.6 billion. Micron Technology first quarter net sales rose 29% to $2.25 billion.

The European indexes declined after Fitch lowered Hungary''s credit rating. French industrial producer price index rose in November. Hungary''s trade surplus fell in October. Spanish PPI climbed in November. Maersk Oil agreed to buy Brazilian assets for $2.4 billion.

Ireland seized Allied Irish Banks Plc and nationalized the fourth bank after High Court approved the seizure without the shareholder approval. The Finance Ministry said it will inject 3.7 billion before the end of the year in the bank and increase the government stake to 92% from 19%. The bank has lost 85% of its market value from the peak of 21 billion euros in 2007.

The UK indexes traded sideways after mortgage approvals fell but services sector index rose. Irish retail sales edged higher in November. Innovation Group agreed to acquire Germany-based Wintec.

Shanghai stocks dropped for a second day on year end liquidity worries. China agrees to buy Portuguese bonds in 2011. CNPC confirms the second phase of Kazakh-China gas pipeline construction. Foreign direct investment in China is expected to reach $100 billion in 2011.

Mumbai stocks dropped in choppy trade after persistent high food price inflation. Handicrafts exports surge 19% in the first eight months to$1.2 billion. India lifted its infrastructure investment target to $1 billion and private sector participation to 50%.

A2Z Maintenance dropped 16% from its IPO price on the first day of trading. Pipavav Shipyard signed an agreement with Sweden-based SAAB Dynamics AB. Suven Life Sciences secured four patents. SAIL upcoming secondary offering may be priced as 12% discount.

Stocks in Australia closed higher as resource stocks led the gainers. Copper closed at a record high and crude oil reached a two-year peak. Australian dollar closed traded above parity reflecting a growing sentiment for high commodities prices in 2011.

Commodities, Currencies and Yields

Dollar edged up against euro to $1.31 and fell against the Japanese yen to 82.91. One UK pound fetched $1.54.

Crude oil increased $1.02 to $91.51 a barrel for a front month contract, natural gas edged lower 8 cents to $4.07 per mBtu and gasoline increased 1.7 cents to 244.15 cents.

Gold decreased $7.70 in New York trading to close at $1,379.70 per ounce, silver decreased $0.09 to $29.29 per ounce and copper for the front month delivery increased 1.70 cents to $4.25 per pound.

Yield on 10-year U.S. bond increased to 3.39% and on 30-year U.S. bond yield inched up at 4.49%.