U.S. Indexes Trim 3% Gains; Commodities Rebound

Bikram Pandey
27 Sep, 2011
New York City

U.S. and world markets rebounded on the hopes of a stronger policy response in the euro zone. The U.S. indexes trimmed earlier gains of 3% and copper, gold and oil surged. European indexes closed up 5% and Greece approved controversial property tax.

[R]4:00 PM New York – U.S. and world markets rebounded on the hopes of a stronger policy response in the euro zone. The U.S. indexes trimmed earlier gains of 3% and copper, gold and oil surged. European indexes closed up 5% and Greece approved controversial property tax.[/R]

U.S. indexes extended rally for the second day in a row and soared more than 1.5% on the optimism linked to the euro zone. The indexes earlier soared as much as 3% but trimmed gains on the worries that seven members of the 17-member region are looking for banks to take more losses.

The European policy makers are looking to finalize the details of the rescue funds and may leverage it to offer more liquidity to alleviate the stress in sovereign bonds in the region and also cut Greece’s debt by half and are said to be close to approving the next tranche of the Greek bailout.

European markets soared and after the close Greece approved the controversial property tax proposal that will be collected with the electric power bill. Greece also approved additional austerity measures that will cut government spending and expedite privatization plans.

European markets jumped on the hopes that the Greek crisis may be contained and banks led the recovery. The market indexes in Germany, France and Milan soared more than 5%.

Italy completed the sale of €14.5 billion of debt at a sharply higher yield and is expected to raise additional €85 billion before the year’s end.

In Asian trading, stocks in Japan rebounded following a rally in the region. The optimism linked to the euro zone progress in containing the widening debt contagion and the last day to purchase stocks to receive first half dividend also supported the indexes.

The Australian benchmark index soared 3.6% after falling for three days in a row. The rally in Australian and in the wider Asian markets was supported on the speculation that the euro zone leaders are close to finalizing the rescue fund details.

ConnectEast’s 80% shareholders tendered shares for CP2 bid of $2.2 billion.

Commodities, Bonds and Currencies

The 10-year U.S. bond yield closed up to 2% and 30-year U.S. bond increased to 3.10%.

The U.S. dollar decreased to $1.361 to one euro and closed higher against the Japanese yen to 76.71 yen.

Immediate delivery futures of Texas crude oil increased $4.23 to $84.47 a barrel and futures of natural gas increased 0.04 cents to $3.82 per mbtu and gasoline price rose 13.13 cents to 270.07 cents a gallon.

In metals trading, copper increased 15.95 cents to $3.44 per pound, gold soared $56.10 or 3.5% to $1,650.90 per ounce and silver increased $2.14 to $32.08.