World Markets Decline After Record Gasoline Prices

Bikram Pandey
05 Mar, 2011
New York City

U.S. indexes turned negative on Friday after crude oil prices rebounded. U.S. employers added 192,000 jobs in February and private sector added jobs for the 12th month in a row. Factory orders rose at the fastest pace in more than four years. Europe struggles with near record retail price of fuel.

[R]6:30 AM New York – U.S. indexes turned decidedly negative on Friday after the rebound in crude oil prices. U.S. employers added 192,000 jobs in February and private sector added new jobs for the 12th month in a row. Factory orders rose at the fastest pace in more than four years. Europe struggles with higher energy prices.[/R]

U.S. indexes declined a day after rallying the most in three-months on the hopes of lower and positive economic data. However, the market sentiment turned negative after the crude oil price continued to gain and reached 29-month high.

Separately, U.S. employers added 192,000 jobs in February after a revised 63,000 increase in January but average hourly earnings were flat. In a separate survey conducted by the Department of Labor based on only those people who are looking for jobs estimated unemployment rate declined to 8.9% from 9%. In all, 13.7 million people are looking for work.

The job growth for two months to February was nearly unchanged from a year ago period but the job addition in February was the most in a year and the 12th monthly addition in the private sector.

The broader measure of unemployment that includes people employed part time but looking for a full time job declined 15.9% in February from 16.1% in January.

The sustained rise in oil price has kept investors worried that new job creation may slow. Retail gasoline prices in Europe jumped as high as 1.67 euros a liter and record prices in Italy and the Nether lands.

The IMF forecast of higher food prices also kept agriculture commodities higher in New York trading.

The European indexes rose after better-than-estimated U.S. jobs data. The ECB President Trichet hinted on a possibility of a rate hike. Spain and Estonia's industrial production increased in January. KBC Group agreed to sell Centea unit to Crédit Agricole for €527 million and Dresser-Rand agreed to acquire Spain-based Grupo Guascor for $690 million.

The UK indexes edged higher after home prices dropped in February and new orders in the construction sector rose in the fourth quarter. WPP net rose 34% reflecting revenue growth.

China region stocks gained as investors focused on the meeting of lawmakers, bankers and policymakers beginning tomorrow for the next ten days. China is looking to drive economic growth in the next five years through higher consumption.

Stocks in Tokyo trading closed higher as crude oil eased and positive economic data in the U.S. The yen fell against the euro lifting the export sensitive stocks. Sumitomo Electric Industries soared 8% after it developed cheaper car battery.

Mumbai stocks surrendered earlier gains. Union Cabinet approved the banking reform bill that will increase shareholder voting right proportional to holding and require an approval for a stake higher than 5%. Tata Power plans to increase its generating capacity eightfold in the next seven years.

Australian indexes closed higher following the overnight increase in New York and London trading. New Zealand-based Fletcher Building extended its offer for Crane by two weeks. Newcrest soared 5% after it doubled the estimate of copper and gold at its mine in Papua New Guinea.

Commodities, Bonds and Currencies

Yield on 10-year bond increased to 3.49% and on 30-year bond fell to 4.60%.

The U.S. dollar decreased to $1.397 to a euro and rose against the Japanese yen to 82.31 yen.

Immediate delivery futures of Texas crude oil increased $2.47 to $104.38 a barrel, for natural gas increased 0.03 cents to $3.81 per mbtu and gasoline prices increased 1.56 cents to 304.20 cents a gallon.

In metals trading, copper prices decreased 1.20 cents to $4.47 per pound, gold increased $11.20 to $1,427.60 per ounce and silver increased $1.05 to $35.75.