U.S. Indexes Turn Lower, Oil Advances to Fresh 30-month Peak

Bikram Pandey
07 Mar, 2011
New York City

The Dow, the S&P 500 and the Nasdaq indexes turned negative after oil resumed its advance for the fourth week as fighting in the Middle East intensified. European markets turned lower after Greek debt was downgraded. Luxury retailers rise after LVMH agreed to acquire a controlling stake in Bulgari.

[R]4:50 PM New York – The Dow, the S&P 500 and the Nasdaq indexes turned negative after oil resumed its advance for the fourth week as fighting in the Middle East intensified. European markets turned lower after Greek debt was downgraded. Luxury retailers rise after LVMH agreed to acquire a controlling stake in Bulgari.[/R]

U.S. stocks turned negative as oil rose as much as 2% and tensions in Libya, Bahrain and Oman intensify. Egypt agreed to appoint a new cabinet that excluded former President Mubarak appointees. But it was the $11 billion deals news that lifted indexes at the opening.

The indexes rallied in the early morning but lost steam as the trading progressed and oil stayed above the highs reached last week.

Investors are increasingly facing the prospect of protracted battle in Libya and oil trading above $110 a barrel. American Airlines is planning to raise $1 billion in a debt sale and airlines around the world are looking for ways to trim costs and raise revenues through additional fees.

Crude oil prices have surged more than 50% in the last six months and are heading higher that are contributing to inflationary pressure worldwide. Crude oil prices have increased $20 a barrel in the last three weeks.

Monday mergers announcements added to deals worth $11 billion.

Western Digital agreed to acquire Hitachi Global Storage for about $4.3 billion. Japan-based Terumo agreed to purchase CaridianBCT for $2.63 billion. Travelport agreed to sell GTA business to Switzerland-based Kuoni for $720 million. LVMH agreed to acquire a controlling stake in Italian-jeweler Bulgari for as much as $5 billion.

The European indexes climb after euro-zone investor confidence rose in March. Ratings agency lowered Greece government bond ratings. Daimler and Rolls-Royce are reportedly in talks to acquire Tognum AG.

The UK indexes closed higher tracking gains in oil. The CBI urged UK chancellor to offer tax relief and focus on economic growth in the next budget. The LSE contemplated bid for Nasdaq. Pearson agreed to acquire Education Development International. IAG agreed to purchase eight aircrafts from Airbus.

Tokyo stocks closed lower after crude oil reached 30-month high, Toyota debt rating was lowered and Japanese foreign minister resigned. Automakers declined in the worries that global demand will decline as crude oil price jump 50% in the last eight months.

Stocks in Shanghai surged as investors focused on domestic economy and in Hong Kong fell after crude oil price surged to 30-month high. The policy makers at a national annual meeting focus on arresting inflation and spreading job growth and wage increase to rural areas.

Mumbai stocks closed lower after oil hit another high and political concerns rose in New Delhi. Regional party DMK withdrew its support to the ruling coalition that may stymie government economic agenda. Rate sensitive stocks led the decliners.

Stocks in Australia fell on the worries that near three-year record petrol prices will impact economic growth and contribute to inflation. The benchmark indexes dropped 1.4%. A private survey of employment ads in Australia indicated an increase of 1.2% in February.

Commodities, Bonds and Currencies

Yield on 10-year bond increased to 3.50% and on 30-year bond rose to 4.61%.

The U.S. dollar decreased to $1.398 to a euro and fell against the Japanese yen to 82.28 yen.

Immediate delivery futures of Texas crude oil increased $0.40 to $104.80 a barrel, for natural gas increased 0.12 cents to $3.92 per mbtu and gasoline prices decreased 3.99 cents to 300.65 cents a gallon.

In metals trading, copper prices decreased 14.35 cents to $4.34 per pound, gold increased $7.00 to $1,435.60 per ounce and silver increased $0.65 to $35.95.