Wall Street Advances on Economic Optimism; Gold Up 2%

Bikram Pandey
03 Jan, 2012
New York City

U.S. stocks soared on the first day of trading after manufacturing expanded and construction spending increased. The trading sentiment was also bolstered after manufacturing in China and Australian showed an increase. Gold soared on rising tensions in the Middle East.

[R]4:40 PM New York – U.S. stocks soared on the first day of trading after manufacturing expanded and construction spending increased. The trading sentiment was also bolstered after manufacturing in China and Australian showed an increase. Gold soared on rising tensions in the Middle East.[/R]

The U.S. indexes gained more than 1.7% after manufacturing expanded in November and construction spending rose.

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.

In corporate news, Venezuela proposed to pay Exxon $255 million in compensation for assets nationalized in 2007 and France-based Total acquired assets in the Utica shale region from Chesapeake for $2.32 billion.

European markets traded volatile as crude oil surged nearly 3% and investors feel the pressure of ahead of sovereign bond sale from Spain and Italy next week. German jobless rate dropped in November but Spanish unemployment rose in December. Total acquired assets in the Utica shale region from Chesapeake and EnerVest, for $2.32 billion.

The UK indexes climbed after manufacturing rose unexpectedly but business confidence fell to a 3-year low in December. Chile-based Codelco exercised its option to buy 49% stake in Anglo American Sur for $6 billion.

Asian markets traded higher after China reported better than expected manufacturing data. Market indexes gains were in a check after crude oil increased 3%. Markets in Japan, mainland China, Japan and Thailand were closed.

Australian stocks opened higher on the back of rising commodities prices and firm Asian markets. Australian retail sales are expected to rise 2.4% in the three weeks to mid-January.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond increased to 1.95% and 30-year bond closed up to 2.98%.

The U.S. dollar edged down 09.1% to $1.306 to one euro and traded lower against the Japanese yen to 76.66.

Immediate delivery futures of Texas crude oil increased $4.23 to $103.06 a barrel and futures of natural gas fell 0.03 cent to $2.99 per mbtu and gasoline price rose 9.6 cents to 275.35 cents a gallon.

In metals trading, copper increased 9.3 cents to $3.52 per pound, gold increased $39.50 to $1,606.30 per ounce and silver increased $1.7 to $29.59.