U.S. Indexes Soar 2% on Construction, Manufacturing Data

Arthi Gupta
03 Jan, 2012
New York City

The U.S. indexes gained more than 2% after manufacturing expanded in November and construction spending rose. Venezuela proposed to pay Exxon $255 million in compensation for assets nationalised in 2007. France-based Total acquired assets in the Utica shale region from Chesapeake for $2.32 billion.

[R]12:30 PM New York – The U.S. indexes gained more than 2% after manufacturing expanded in November and construction spending rose. Venezuela proposed to pay Exxon $255 million in compensation for assets nationalised in 2007. France-based Total acquired assets in the Utica shale region from Chesapeake for $2.32 billion.[/R]

U.S. indexes jump 2% on the optimistic outlook on the world markets and Asian markets gained after China reported expansion in manufacturing.

U.S. manufacturing expanded at the fastest pace in six months in December and new orders increase indicated a continued momentum in 2012.

The latest survey from the Institute for Supply Management said factory activities index increased to 53.9 in December from 52.7 in November. The index above 50 indicates an expansion.

New orders index increased to 57.6 from 56.7 in November indicating sustained activities in the current year.

In a separate report, the Commerce Department said construction spending increased 1.2% in November from the revised October spending decline of 0.2%.

Private construction spending increased 1% in the month to annual rate of $552 billion, highest since December 2009 and public construction increased 1.7%.

Markets in Asia and commodities gained after the release of China’s manufacturing data.

China's Purchasing Managers Index, a gauge of the country's manufacturing activity, rose more than estimated to 50.3 in December from 49 in November, the China Federation of Logistics and Purchasing said late Saturday.

Earlier in the week, India also reported rising manufacturing production.

European indexes traded volatile after crude oil surged on the rising tensions in the Middle East and China reported an increase in manufacturing activity in December. Markets were also under pressure ahead of sovereign bond auctions in the next two weeks.

Germany and France are set to offer first bond auction this week and raise €13 billion and next week Spain and Italy are scheduled to conduct their first bond auctions.

The yield spread of the French bonds to German bonds widened to 141 basis points and German bund rose 12 basis points to 138 basis points. The 10-year yield on the Italian bonds increased 2 basis points to 6.94% and similar Spanish bond yield increased 6 basis points to 5.2%.

Unemployment in Germany declined more than estimated in December but Spain's jobless rate increased for the fifth consecutive month in December.

Asian Markets Surge

The benchmark index in Australia increased 1.1% to 4,101.20, in Seoul added 2.7% to 1,875.41 and in Hong Kong surged 2.4% to 18,877.41. The Sensex index in India soared 2.7% to 15,939.36.

In regional trading gold traded at $1,590.20 per ounce and the Brent crude oil futures increased $2.97 a barrel to $110.35. Crude oil gained on the back of the worries of the crude oil supplies from the Middle East and better than expected manufacturing reading in China.

Singapore’s gross domestic product declined for the second time in three quarters and in the fourth quarter declined to annual fall of 4.9% from the third quarter.

In currency trading, Australian dollar gained 0.7% to $1.03 and New Zealand dollar increased 0.9% to 78.53 U.S. cents. South Korea’s won gained 0.4% to 1,150.82 and rupee in Mumbai traded at 53.21 against one dollar.

Exxon Gets Compensation

Venezuela said it will pay Exxon Mobil $255 million in compensation for assets nationalised by Venezuelan President Hugo Chavez in 2007.

The International Chamber of Commerce in Paris had ruled that PdVSA, Venezuela's state oil company should pay Exxon $908 million.

Pioneer Drilling Acquires Go-Coil

Pioneer Drilling Company acquired Louisiana based Go-Coil, L.L.C. for approximately $110 million in cash.

The company said it expects the acquisition to be accretive to earnings and contribute approximately $26 million to $29 million of EBITDA in the current year.

Samsung Plans to Re-enter Japanese TV Market

Samsung Electronics Co. Ltd., the South Korean conglomerate plans to re-enter the Japanese market for flat-panel televisions in 2013, the Nikkei business daily reported on Monday. The company reportedly plans to launch a lineup of organic electroluminescene and LCD television sets.

Total Expands Position in USA

Total SA acquired certain assets in the oil-rich area of the Utica shale region in Ohio from Chesapeake Energy Corp. and EnerVest, Ltd. for $2.32 billion.

As per the agreement, Total's subsidiary, Total E&P USA, Inc. completed a joint venture deal with Chesapeake Exploration LLC, a unit of Chesapeake Energy, and affiliates of its partner EnerVest to acquire a 25% stake in their liquids-rich area of the Utica shale play located across 10 counties on the eastern side of the state of Ohio.

Total will also acquire a 25% share in any new acreage which will be acquired by Chesapeake in the liquids-rich area of the Utica shale play.