World Markets Retreat on Greece and Euro-zone Worries

Bikram Pandey
20 May, 2011
New York City

U.S. stocks turned lower in the morning and failed shake off losses at close. The incipient rally of two days came to a halt as the Dow closed lower for the third week in a row. Crude oil and gold closed higher as the dollar declined. European Union struggles to contain Greek crisis.

[R]4:15 PM New York – U.S. stocks turned lower in the morning and failed shake off losses at close. The incipient rally of two days came to a halt as the Dow closed lower for the third week in a row. Crude oil and gold closed higher as the dollar declined. European Union struggles to contain Greek crisis as Japan addresses the triple disaster aftermath.[/R]

U.S. indexes traded lower after disappointing earnings from retailers. Merger news dominated trading. Fortune Brands sells Acushnet business to Korean consortium for $1.23 billion. Barnes & Noble received $1 billion buyout. Chrysler Group priced debt offerings to raise $7.5 billion.

Aeropostale first quarter net income declined 64% to $16.4 million. Donaldson third quarter net earnings surged 25% to $62 million. Intuit third quarter net income rose to $688 million. Salesforce.com first quarter net income tumbled to $0.5 million. Gap first quarter net income declined 23% to $233 million.

In European trading Greece was the focus as another rating agency downgraded the country’s credit rating three levels. But yields on bonds of Spain, Portugal, Ireland rose a fraction near highs seen in one year.

The European indexes declined after euro-zone current account deficit narrowed and French leading index rose in March. German producer price inflation increased in April. Siemens ordered to pay €648 million as compensation to Areva.

The UK indexes rose after Irish trade surplus improved in March. MOEX agreed to pay $1.07 billion to BP on Deepwater Horizon oil spill. Mitchells & Butlers first-half revenue declined 9%.

Stocks in Japan struggled despite foreign investors added net to net holdings for the 28th week in a row. Tepco reported 1.25 trillion yen or $15.2 billion of loss after the close. Banks declined on the uncertainty linked to Tepco debt.

Stocks in Mumbai gained on the optimistic outlook and ignored the resurgent inflation data. The rupee hovered near 2-month low. Reserve Bank of India discontinued its second liquidity adjustment facility as liquidity improves.

Australian stocks turned lower on weak regional trading. Commodities rebounded but miners declined after Western Australia lifted royalty payment on certain grades of iron ore. Fortescue Metals estimated iron ore reserves of 716 million tons at its project in Western Australia. Banks closed lower.

Commodities, Bonds and Currencies

The 10-year bond yield decreased to 3.15% and 30-year bond rose to 4.30%.

The U.S. dollar decreased to $1.416 to a euro and fell against the Japanese yen to 81.68 yen.

Immediate delivery futures of Texas crude oil increased $1.05 to $99.49 a barrel, of natural gas increased 0.16 cents to $4.26 per mbtu and gasoline prices increased 2.95 cents to 295.55 cents a gallon.

In metals trading, copper prices increased 5.55 cents to $4.10 per pound, gold increased $21.20 to $1,513.60 per ounce and silver increased $0.07 to $35.01.