U.S. Indexes Rebound on Global Manufacturing Gains

Devan Biswas
01 Feb, 2012
New York City

Global indexes gained after a rise in manufacturing in the U.S., China, India, UK and Germany and Sweden. The S&P and Nasdaq indexes increased 1.2% after private sector added jobs and metals closed higher. Broadcom, Whirlpool surge on earnings and Sony picks a new chief.

[R]4:10 PM New York – Global indexes gained after a rise in manufacturing in the U.S., China, India, UK and Germany and Sweden. The S&P and Nasdaq indexes increased 1.2% after private sector added jobs and metals closed higher. Broadcom, Whirlpool surge on earnings and Sony picks a new chief.[/R]

The U.S. indexes gained after employment in the private sector grew in January and latest reads on manufacturing showed expansion in the U.S., China, India, Germany, Sweden and UK.

The surprise strength in manufacturing across the globe encouraged investors to bid up stocks on both sides of Atlantic and in Asia. The UK and Indian manufacturing index rose to an 8-month high and in Germany rose for the first time in five months.

The U.S. indexes gained after a 4-day decline and a rise of 6% in the year so far. In January, the indexes in Germany gained more than 11%, in Japan added above 4% and in Hong Kong and India jumped nearly 10%.

The Congressional Budget Office projected a $1.1 trillion federal budget deficit for fiscal year 2012, however investors are hoping that budget gap will shrink next fiscal year below $1 trillion.

In corporate news, Mattel completed acquisition of HIT Entertainment for $680 million. Amazon.com fourth quarter net declined 58% to $177 million. ACE fourth quarter net slipped 25% to $750 million. Chrysler Group fourth quarter net income swung to $225 million. Exxon Mobil fourth quarter net increased to $9.4 billion. Northrop Grumman fourth quarter net soared to $548 million.

European markets rose after Germany and Portugal completed bond auctions at lower yields. The European Commission blocked the proposed merger of NYSE Euronext with Deutsche Boerse. Dassault Aviation was named as a preferred bidder for fighter jets by India.

Manufacturing activity in the euro area was mixed and French manufacturing activity declining further in January. Euro area annual inflation remained unchanged but German flash consumer price inflation rate fell in January. Norwegian jobless rate rose in November.

The UK indexes rose more than 1% after manufacturing activity rose to an eight-month high, home prices fell, and Irish manufacturing sector declined in January. Traders were optimistic that the Greek debt-swap talks too would be resolved by the weekend.

Tokyo stocks were flat as earnings release accelerated this week. Sony replaced its chief executive as losses in its TV unit mount. Nomura reported a slight profit after the close and Sumitomo Heavy lowered annual earnings outlook. All Nippon Air lifted its operating earnings estimate.

Australian indexes eased after home prices fell December quarter. Wesfarmers traded down ahead of its quarterly results tomorrow. Fortescue Metals Group declined after a key investor cut its stake to 1% from 4%.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond increased to 1.84% and 30-year bond closed up at 3.01%.

The U.S. dollar traded down 0.6% to $1.316 to one euro and traded lower against the Japanese yen to a 3-month low to 76.225.

Immediate delivery futures of Texas crude oil fell 96 cents to $97.52 a barrel and futures of natural gas declined 13 cents to $2.36 per mbtu and gasoline price increased 0.3 cents to 289.4 cents a gallon.

In metals trading, copper increased 4.4 cents to $3.83 per pound, gold increased $7.80 to $1,748.20 per ounce and silver increased 53 cents to $33.80.