U.S., World Stocks Decline; Oil Touches $100, Libya Splits

Bikram Pandey
23 Feb, 2011
New York City

U.S. stocks traded lower as Libya took center stage and oil rallied to $100 a barrel before settling at $98.10. The nascent U.S. economic recovery could take a hit if crude oil remains above $90 a barrel for the next 45 days. Technology stocks declined after Hewlett Packard dropped 9.5%.

[R]4:40 PM New York – U.S. stocks traded lower as Libya took center stage and oil rallied to $100 a barrel before settling at $98.10. The nascent U.S. economic recovery could take a hit if crude oil remains above $90 a barrel for the next 45 days. Technology stocks declined after Hewlett Packard dropped 9.5%.[/R]

World markets edged lower as protests continue in Bahrain and protesters take control of Eastern Libya. Gaddafi vowed to stay in power as he continued to rule Tripoli. Libya supplies nearly 1.5 million barrels a day of oil to Europe and nearly one third to Italy.

However, the development in Libya was sufficient to worry commodities markets and crude oil jumped to $100 a barrel for the first time since October 2008 before closing up 4% at $98.10.

The oil price gain for more than two months can have a significant impact on the nascent U.S. economic recovery and slow down fast growing nations in Asia.

123jump.com research team estimated $10 a barrel price increase for three months can slow the annual economic growth in the U.S. by 0.3% and in China by 0.2% and in India by 0.4%. Europe could see a slowdown of as much as 0.5%

Forest Labs agreed to acquire Clinical Data for $1.2 billion. Nasdaq may bid for NYSE. Hewlett Packard falls on lower than expected outlook.

Chesapeake Energy reported fourth quarter net income of $180 million. DIRECTV said net income in the quarter of $618 million. Hewlett-Packard first quarter net income soared 16% to $2.6 billion. Lowe''s fourth quarter net earnings surged 39% to $285 million. Westlake Chemical quarterly net rose to five-fold.

The European indexes slid after unrest in Libya continued. Euro-zone industrial orders grew in December. Merkel hinted on an extension of Greece repayment period. French inflation index stays flat in January. Spanish mortgage approvals slumped in December. Accor and Commerzbank swing to profit.

The UK indexes plunged after escalating turmoil in Libya weighed on investor sentiment. The Bank of England policy members were split on key rate hike and UK mortgage approvals rose in January. Irish trade surplus dropped in December. Centrica signed £2 billion gas deal with Qatar.

Stocks in Japan extended losses for the second day as crude oil surges and investors worry of the growing contagion in the Middle East. The Nikkei index declined 0.8% and fell 1.8% in the last two days of trading. Automakers, exporters and banks closed lower.

Stocks in China closed higher but in Hong Kong fell on the weakness in property stocks. Hong Kong economy expanded at a faster than expected pace of 6.8% in 2010 and the government estimated economy to grow between 4% and 5% in 2011. Gold miners surge in Shanghai and Hong Kong property developers fell.

Stocks in Mumbai declined in the final hour of trading as crude oil price increase sparked fears of another bout of inflation. Goodyear India and Bata India reported sharply higher earnings. Reliance Infra soared after it commenced metro link to airport in New Delhi.

Stocks in Australia declined but rebounded from the lows as the dollar gained. Crude oil surged for the third day and third week in a row as furor in Libya lead to more bloodshed. Suncorp Group first half net declined 39%. Coca-Cola Amatil annual net increased 11%.

Commodities, Bonds and Currencies

Yield on 10-year bond increased at 3.48% and on 30-year bond fell to 4.58%.

The U.S. dollar increased to $1.375 to a euro and rose against the Japanese yen to 82.48 yen.

Immediate futures prices of Texas crude oil increased $3.07 to $98.49 a barrel, for natural gas rose 0.02 cents to $3.89 per mbtu and gasoline prices increased 12.40 cents to 272.62 cents a gallon.

In metals trading, copper prices decreased 3.20 cents to $4.33 per pound, gold increased $9.60 to $1,410.70 per ounce and silver rose 61 cents to $33.48.