World Markets Stabilize; U.S. GDP Revised Lower

Bikram Pandey
25 Feb, 2011
New York City

U.S. indexes rebounded and European markets closed mixed after crude oil prices stayed near 30-month high. U.S. lowered fourth quarter economic growth to 2.8% from 3.2% and consumer confidence rose in February.

[R]4:00 PM New York – U.S. indexes rebounded and European markets closed mixed after crude oil prices stayed near 30-month high. U.S. lowered fourth quarter economic growth to 2.8% from 3.2% and consumer confidence rose in February.[/R]

U.S. stock futures gained after crude oil declined and Saudi Arabia and OPEC member nations assured of higher supply to meet any shortfall from Libya. International Energy Agency also said it will release from its stockpile. Unrest and disruptions in Libya and Bahrain continue.

Boeing won $35 billion Air Force air-refueling tanker contract. The contract for 179 767-based tankers is expected to generate 11,000 direct and indirect jobs in Washington state.

U.S. Commerce Department also revised lower GDP expansion in the fourth quarter to 2.8% from the earlier estimate of 3.2% after the 2.6% increase in third quarter. U.S. consumer confidence index also increased in February from January.

AIG fourth quarter net income generated $11.2 billion. Autodesk fourth quarter net income rose 23% to $61.6 million. First Solar quarterly net income rose 10.2% to $156.0 million. Freddie Mac fourth quarter net loss narrowed 78.2% to $1.7 billion. Sears quarterly net income declined 8% to $374 million. Target Net earnings in the quarter soared 10.5% to $1.0 billion.

The European indexes rose after oil price eased. Euro area money supply growth slackened, French consumer spending declined and Spanish PPI soared in January. German consumer price inflation was steady at 2% in February. Saint-Gobain net surged more than five-fold.

Volkswagen AG said annual net income surged sevenfold to 6.84 billion euros after it delivered 7.2 million vehicles around the world and sold 1.92 million cars in China, its largest market.

The UK indexes edged higher after the economy contracted more than initially estimated in the fourth quarter. The UK consumer confidence grew, service sector activity declined and business investment fell. Tata Steel UK sold certain assets of TCP to Sahaviriya in a deal valued at $469 million.

Stocks in Tokyo rebounded after crude oil declined and Saudi Arabia and West Africa nations pledged to increase supply. Consumer prices declined at the smallest pace in January since April 2009 but economists warned that cost driven inflation is not good for economy. Nikkei rose Friday and lost 2.9% in the week.

Stocks in Shanghai edged lower but in Hong Kong gained. Crude oil decline lifted trading sentiment in China region. Banks, property developers and oil refiners closed higher in Hong Kong. AIA Group Ltd reported 2010 net surged 54% on higher investment income.

Mumbai stocks closed higher as railways minister presented populist budget and proposed to extend 1,300 kilometers of new tracks. Minister Mamata Banerjee left passenger and freight rates unchanged in her third budget in a row. The $12.7 billion budget, the largest annual outlay will be funded with $4.5 billion borrowings.

Australian stocks rebounded after crude oil declined on the pledges from Saudi Arabia to meet any shortfall from Libya. Woolworths first-half net rose 6%. Iluka soared after it reported better than expected profit. Harvey Norman net dropped 17%.

Commodities, Bonds and Currencies

Yield on 10-year bond decreased at 3.42% and on 30-year bond fell to 4.51%.

The U.S. dollar increased to $1.374 to a euro and fell against the Japanese yen to 81.70 yen.

Immediate delivery futures of Texas crude oil increased $0.95 to $98.23 a barrel, for natural gas rose 0.14 cents to $4.01 per mbtu and gasoline prices increased 1.80 cents to 273.48 cents a gallon.

In metals trading, copper prices increased 12.85 cents to $4.47 per pound, gold decreased $5.30 to $1,410.50 per ounce and silver fell $0.03 to $33.15.