U.S. Indexes Up 1.3%; Global Markets Advance on China Data

Bikram Pandey
14 Jun, 2011
New York City

World markets gain after China reported strong industrial production and retail sales. U.S. retail sales declined for the first time in ten months on weak auto sales. Merger news dominated for the second day this week. ECB and Germany negotiate Greek bailout terms.

[R]4:00 PM New York – World markets gain after China reported strong industrial production and retail sales. U.S. retail sales declined for the first time in ten months on weak auto sales. Merger news dominated for the second day this week. ECB and Germany negotiate Greek bailout terms.[/R]

U.S. indexes gained after producer prices rose 0.2% and retail sales dropped 0.2% in May, first decline in eleven months. World markets and crude oil gained after China reported strong economic data.

Retail sales declined for the first time in ten months largely on the weak auto and related sales on supply disruptions after earthquake in Japan. Excluding auto sales, retail sales increased 0.3%.

The merger activity heated up for the second day of this week. Graham Packaging confirmed unsolicited acquisition proposal. Avis Budget Group agreed to acquire Avis Europe for $1.0 billion. Ericsson agreed to buy Telcordia for $1.15 billion.

In the earnings news, Agilysys fourth quarter net loss in the quarter widened. Best Buy first quarter net earnings fell to $136 million. Casey''s General fourth quarter net profit increased 4.1%. Honda Motor expects fiscal year 2012 net income of 195 billion yen.

The European indexes advanced tracking gains in Asia and better-than-estimated industrial output from China. European finance ministers are set to meet today to discuss the next bailout package for Greece. Spain successfully auctioned €5.42 billion in short term debt.

The OECD leading indicator remained unchanged in April. French current account deficit widened in April and Spanish inflation eased in May. Romanian jobless rate increased to 7.3% in 2010.

The UK indexes rose after annual inflation remained unchanged at 4.5% in May. The UK home prices declined in April and leading index improved in April. Avis Budget Group agreed to acquire Avis Europe for £635 million.

The benchmark index in Tokyo increased 1.1% after Japanese government approved the scheme to compensate nuclear disaster victims and Bank of Japan unveiled a $6 billion loan program for the earthquake affected region. Separately the central bank also left the rates and asset buying program on hold.

China’s industrial production rose 13.3% annually in May compared to 13.5% increase in April. Separately, inflation rose to 5.5% in May from 5.3% in April, the National Statistics Bureau said. The inflation rate was the highest since July 2008.

However, the Chinese central bank announced a hike in reserve requirement ratio for the sixth time this year to contain inflation. The central bank lifted the reserve ratio by 50 basis points, effective from June 20.

Stocks in Mumbai traded after four days of losses. The latest wholesale inflation data showed elevated inflation prompting worries of another rate hike. Ideal Cellular increased after fourth quarter net increased 13% and added net 10 million new subscribers.

Stocks in Australia closed higher after China reported strong economic data. QBE Insurance said first net profit is expected to increase as much as 60% on improved investment performance.

Commodities, Bonds and Currencies

The 10-year bond yield increased to 3.08% and 30-year bond closed up to 4.28%.

The U.S. dollar decreased to $1.448 to a euro and rose against the Japanese yen to 80.48 yen.

Immediate delivery futures of Texas crude oil increased $1.68 to $98.98 a barrel and futures of natural gas fell 0.03 cents to $4.61 per mbtu and gasoline price rose 5.16 cents to 304.84 cents a gallon.

In metals trading, copper rose 11.80 cents to $4.17 per pound, gold gained $4.10 to $1,519.70 per ounce and silver increased $0.40 to $35.12.