Tired Global Markets Rally; Offerings Rise

123jump.com Staff
16 Jun, 2009
New York City

A growing chorus of investors are staying on the sidelines. The growing skepticism on market fundamentals, weak sentiment in commodities prices and flood of new stock offering in Asia, Europe and the U.S. Industrial production declined 1.1% in May but housing starts rebounded from April.

[R]4:00 PM New York, 9:00 PM London, 6:00 AM Sydney – A growing chorus of investors are staying on the sidelines. The growing skepticism on market fundamentals, weak sentiment in commodities prices and flood of new stock offering in Asia, Europe and the U.S.[/R]

The U.S. stocks closed lower after mixed economic reports and weak earnings from the retailer Best Buy. Weak copper and metals prices dragged miners and metal processors lower.

The U.S. industrial production in May declined 1.1% after falling revised 0.7% in April. The overall industrial output is 13.4% lower from a year ago. Manufacturing output declined 1% in May and plunged more than 15% from a year ago.

The producer price index increased 0.2% in May after increasing 0.3% in April and falling 1.2% in March.

Privately-owned housing starts in May on a seasonally adjusted annual rate of 532,000 were 17.2% above the revised April estimate of 454,000 and 45.2% below rate of 971,000 a year ago.

Harman International dropped 11% after it proposed to sell 9 million shares. Bruker Corp filed to offer 70 million shares. Best Buy first quarter revenues declined 12% and net income fell 14.5%. Tyco Electronics surges 8% on revised operating earnings outlook.

German investor confidence increases to a 3-year high this month. National Bank of Greece plunged 11% on rights offering. Publicis Groupe plans 719 million euros convertible bond issue. TUI plunges on a broker outlook and UBS debt put on watch by a rating agency.

In cautious London trading, stocks edged higher. UK debt offering received substantially higher interest for its debt offering that was increased to £7 billion. The consumer price index in May declined to 2.2% but stayed above the central bank target. Rolls Royce Group received two engine orders.

The Bank of Japan left its key lending rate in a unanimous decision unchanged at 0.1%. Weakness in new condo offerings in Tokyo and in mining sector stocks and in the U.S. manufacturing activities dragged markets in Asia and Japan lower.

Stocks in China region declined on the global worries and tired rally. China lowers its holdings of U.S. Treasury bonds and also committed to lend $10 billion to members of Shanghai Cooperation Organization. Commodities linked stocks traded lower.

Stocks in India increased after falling for three days in a row as corporations file higher advance taxes. State Bank of India tax payment surged 61%. HDFC Bank and other smaller banks also paid higher advance taxes. L&T tax payment increased 16% and Mahindra & Mahindra paid 25% more.

North American Markets

Dow Jones Industrial Average decreased 107.46 or 1.3% to a close of 8,504.67, S&P 500 Index decreased 11.75 or 1.3% to 911.97, and Nasdaq Composite Index edged lower 20.20 or 1.1% to close at 1,796.38. Toronto TSX Composite Index closed down 87.38 or 0.8% to 10,307.40.

Of the stocks in S&P 500 index, 79 increased, 418 declined and 3 were unchanged.

Harman International Industries led the decliners in the S&P 500 index with a loss of 12.5% followed by losses in E*Trade Financial of 8.8%, in Zions Bancorp of 7.6%, in Best Buy Company of 7.3% and in Nordstrom Inc of 6.8%.

Cigna Corp led gainers in the S&P 500 index with a rise of 5.6% followed by gains in Aetna Inc 4.7%, in Hartford Financial Services of 3.8% and Qwest Communications of 3.8%.

South American Markets Indexes

Mexico Bolsa Index decreased 674.86 or 2.7% to 24,224.83. Brazil Bovespa Stock Index dropped 828.04 or 1.6% to 51,205.78.

Argentina Merval Index decreased 4.1%, Chile Stock Market Select index lost 1.4%, Peru Lima General Index declined 1.9% and Colombia IGBC General Index dropped 1.1%.

Europe Markets Review

In London FTSE 100 Index closed higher 2.56 or 0.06% to 4,328.57, in Paris CAC 40 Index decreased 5.63 or 0.17% to close at 3,213.95 and in Frankfurt DAX index higher 0.78 or 0.02% to close at 4,890.72. In Zurich trading SMI decreased 23.05 or 0.43% to close at 5,377.10.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 286.79 or 2.86% to 9,752.88, Hang Seng index in Hong Kong decreased 333.46 or 1.80% to 18,165.50, CSI 300 index in China declined 4.97 or 0.17% to 2,961.22. ASX 200 index in Australia decreased 69.20 or 1.72% to 3,962.50. The KL Composite index in Malaysia closed lower 17.05 or 1.56% to 1,074.12.

The Kospi Index in South Korea decreased 13.27 or 0.94% to close at 1,399.15. SET index in Thailand closed lower 15.38 or 2.51% to 596.54 and JSE Index in Indonesia decreased 39.51 or 1.91% to 2,030.37. The Sensex index in India increased 82.39 or 0.55% to 14,957.91.

Commodities, Metals, and Currencies

Crude oil decreased $0.13 to close at $70.49 a barrel for a front month contract, natural gas decreased 7 cent to $4.11 per mBtu and gasoline increased 1.85 cents to 207.15 cents.

Wheat futures closed down 9.50 cents in Chicago trading to $5.65 a bushel. Sugar decreased 0.12 cent in trading at 15.78 cents a pound. Soybean future closed up 3.75 cents to $10.28 a bushel.

Gold increased $8.00 in New York trading to close at $935.50 per ounce, silver closed up $0.16 to $14.19 per ounce and copper for the front month delivery decreased 4.35 cents to $2.25 per pound.

Dollar edged lower against euro to $1.3842 and closed down against the Japanese yen to 96.43.

Yields on 10-year U.S. bonds decreased to 3.65% and with 30-year maturities closed down at 4.46%.