Global, U.S. Stocks Brave Higher; Japan Advances in Reactor Containment

Bikram Pandey
17 Mar, 2011
New York City

U.S. indexes closed higher on a positive sentiment after the latest inflation data and a decline in weekly jobless claims. Mixed economic news in Europe and an improvement in German construction industry data lifted indexes in Europe. Commodities edged higher.

[R]4:00 PM New York – U.S. indexes closed higher on a positive sentiment after the latest inflation data and a decline in weekly jobless claims. Mixed economic news in Europe and an improvement in German construction industry data lifted indexes in Europe. Commodities edged higher.[/R]

U.S. indexes climbed after consumer prices index rose 0.5% in February and weekly jobless claims declined 16,000 to 385,000.

The market sentiment was also improved after Japan accelerated efforts to cool reactors and increased the number of workers at the troubled nuclear power plant. Tokyo Electric Power said water from cannons and helicopters are having some success in cooling nuclear reactors at Fukushima Daiichi nuclear power plant.

The shareholder approval to merge two telecom companies also contributed to the sentiment but the rising tensions in the Middle East and North Africa lifted energy prices.

VimpelCom Ltd shareholders approved the combination of the company with Wind Telecom S.p.A., despite a vocal opposition from its largest shareholder Telenor ASA.

In all 53.5% of voted shares approved the merger with the assets controlled by the Egyptian billionaire Naguib Sawiris and valued at $6 billion. Telenor controls a 36% voting take in VimpelCom and has been involved in a legal fight with the company and instead urging the telecom carrier to lower its debt.

Through the deal, VimpelCom will have more than 50% stake in Orascom and Italy based Wind Telecommunicazioni SpA.

Across the Atlantic in mixed economic news, investors focused on the positive and market indexes rebounded. However, global insurance and reinsurance companies closed lower for the fourth day in a row.

Euro area construction output rebounded in January and German building permits rose in 2010. Swiss economic growth outlook revised up for the current year. Unemployment rate in Greece soared to 14.2% at the end of last quarter and the rate surged to 18% among women.

European indexes gained after six straight days of declines as U.S. and European scientists help Japan contain radiation leak. A meeting of G7 finance ministers tomorrow is scheduled to discuss the impact of the Japanese earthquake on global economy.

In earnings news, HeidelbergCement returned to profit and Lanxess AG and Krones AG reported better than expected results.

The UK indexes rebounded ahead of the Group of Seven finance ministers meeting. UK inflation estimated to rise to the highest level since August 2008 and the OECD forecasted subdued economic growth for UK in 2011. Legal & General fiscal year 2010 revenue and net declined.

Stocks in Tokyo in a roller coaster ride closed lower after a cautious statement from an American official prompted the yen to surge to a post World War II record. Insurance carriers fell and Japanese exporters brace for one month of production loss.

Stocks in Mumbai edged lower after the Reserve Bank of India hiked rates by 0.25% as expected but lifted the current fiscal year inflation estimate to 8% from 7%. Rate sensitive automakers, banks and real estate developers led the decliners.

Stocks in Sydney in a choppy trading declined to six-month low as international worries overshadowed the trading sentiment. Wesfarmers placed its coal mining division for sales and the retailer Myer lowered its full year outlook for the second time.

Commodities, Bonds and Currencies

Yield on 10-year bond increased to 3.27% and on 30-year bond increased to 4.47%.

The U.S. dollar decreased to $1.40 to a euro and increased against the Japanese yen to 78.95 yen.

Immediate delivery futures of Texas crude oil increased $2.93 to $100.91 a barrel, of natural gas increased 0.16 cents to $4.11 per mbtu and gasoline prices increased 7.96 cents to 292.33 cents a gallon.

In metals trading, copper prices increased 16.45 cents to $4.36 per pound, gold increased $8.70 to $1,404.80 per ounce and silver decreased $0.07 to $34.40.