U.S., European Markets Rally; Euro Firm, Oil Up

Bikram Pandey
21 Jun, 2011
New York City

U.S. and European markets rebound with resources linked stocks leading the advance. Oil, copper and gold turn positive. The S&P 500 index gained nearly 3% in the last four days and the Nasdaq added 1.8%. The euro held firm as Greek lawmakers debate austerity plan.

[R]4:00 PM New York – U.S. and European markets rebounded with resources linked stocks leading the advance. Oil, copper and gold turn positive. The S&P 500 index gained nearly 3% in the last four days and the Nasdaq added 1.8%. The euro held firm as Greek lawmakers debate austerity plan.[/R]

U.S. indexes gained as Greek lawmakers debate austerity measures before the confidence vote. Investors bet that Greek government will win the vote of confidence and pass austerity measures to win the financial assistance from the European Union and the IMF.

The Euro-zone ministers, the European Central Bank, the IMF and Greece remain at odds in how to fund the last portion of first bailout. Greece has till July 3 to approve austerity measures and till July 11 to meet the conditions for the second bailout.

Prime Minister George Papandreou headed party has 155 member in a 300-seat Parliament. The vote is expected to be close.

Investors also focused on the 2-day meeting at the U.S. Federal Reserve. At the conclusion of the meeting the Fed is expected to leave rates unchanged and many are pinning their hopes on the extension of the $600 billion of bond buying program.

In corporate news, eBay completed acquisition of GSI Commerce for $2.4 billion. Raytheon secured $1.7 billion contract to upgrade Patriot for Saudi Arabia. Weatherford settled claims with BP relating to the Deepwater Horizon oil spill. Elekta agreed to buy Nucletron for €365 million.

Barnes & Noble reported fourth quarter net loss widened to $59.4 million. Carnival second quarter net income fell to $206 million. Susquehanna will acquire Tower Bancorp for $343 million. Walgreen third quarter net earnings grew to $603 million.

Across the Atlantic, German economic sentiment deteriorated in June and leading index rose in April. Swiss economic growth forecasted to slow to 1.9% in 2012. The jobless rate in Finland declined in May.

In Europe, the indexes in Germany, France and UK gained at close as investors voiced optimism on the Greek vote. The UK public sector borrowing declined in May and manufacturing demand remained strong in June. Irish trade surplus narrowed in April.

Stocks in Japan increased for the second day in a row after investors focused on the domestic manufacturing recovery. TDK Corp gained after it increased dividend and estimated net to increase 11% in the current year.

Australian stocks edged higher following a rise in commodities and international markets. Foster’s soared after it rejected all-cash bid from SAB Miller.

Commodities, Bonds and Currencies

The 10-year bond yield increased to 2.96% and 30-year bond traded up to 4.195%.

The U.S. dollar decreased to $1.440 to one euro and fell against the Japanese yen to 80.15 yen.

Immediate delivery futures of Texas crude oil increased $0.47 to $93.70 a barrel and futures of natural gas fell 0.07 cents to $4.38 per mbtu and gasoline price fell 4.3 cents to 286.85 cents a gallon.

In metals trading, copper rose 1.7 cents to $4.10 per pound, gold gained $4.60 to $1,546.60 per ounce and silver increased $0.41 to $36.48.