Yield Spread Widens; Markets in U.S., Europe Up

123jump.com Staff
21 Dec, 2009
New York City

U.S. stocks advanced after the yield curve steepened, mining stocks rise and healthcare stocks gain on high volume. Rate spread between two and ten years bonds increased to 281 basis points. Commodities prices edged higher. Merger news of $4 billion also contributed to gains in indexes.

[R]4:00 PM New York, 9:00 PM London, 8:00 AM Sydney – U.S. stocks advanced after the yield curve steepened, mining stocks rise and healthcare stocks gain on high volume. Rate spread between two and ten years bonds increased to 281 basis points. Commodities prices edged higher. Merger news of $4 billion also contributed to gains in indexes.[/R]

U.S. stocks edged higher after prospect of economic recovery steepened the bond yield curve. Analysts also upgraded stocks in healthcare and mining sector. Alcoa surged more than 9% after a broker upgraded the stock. Healthcare stocks rallied after the Senate bill soon to be voted postponed the $7 billion tax by one year on health insurers.

The yield spread between bonds with maturities of 2 years and 10 years increased to 281 basis points. The yield curve has been a good predictor of economic outlook in the past.

Nickel edged up higher after Russia added 5% export duty. The dollar advanced against the euro and the pound.

Stocks in New York traded higher as the U.S. Senate nears a historic healthcare system overhaul. Healthcare insurers led the gainers. Three separate deals worth $4 billion drove stocks higher. TreeHouse, Bucyrus International and Chattem surged on merger deals.

European market indexes edged higher as the prospect of economic recovery looks brighter in the region. Estimates of economic growth were revised higher by the European Commission and a trade group in the UK. Safran SA gained on $5 billion orders from China.

UK stocks edged higher after the Confederation of British Industries revised higher its economic and interest rate outlook. Commodities, metals and energy prices inched higher. LSE will merge its dark pool trading platform with Turquoise and take a 60% stake and £20 million charge.

Stocks in Tokyo traded higher on the rebound in commodities prices. November exports declined 6.2% from a year ago month but edged 4.9% higher from October. Previously owned condo prices in Tokyo declined 2.4% in the month. Honda plans to add vehicle manufacturing capacity in China.

Chinese government is targeting at least 8% economic growth in 2010 and industrial production increase of 11% matching the rates in 2009. Rising domestic spending, government stimulus and increased bank loans are driving the economic expansion.

Australian stocks edged lower but commodities closed higher. Lend Lease plans to spend A$6 billion to develop Barangaroo financial precinct in Sydney. Qantas Airways profit before tax in the current fiscal half year may fall between A$50 million and A$150 million.

North American Markets

Dow Jones Industrial Average increased 85.18 or 0.8% to a close of 10,414.07, S&P 500 Index edged higher 11.57 or 1.1% to 1,114.04, and Nasdaq Composite Index increased 25.97 or 1.2% to close at 2,237.66. Toronto TSX Composite Index added 86.72 or 0.8% to 11,550.12.

Latin American Markets Indexes

Mexico Bolsa Index increased 1102.05 or 0.3% to 31,936.12 and Brazil Bovespa Stock Index fell 869.02 or 1.3% to 65,925.19.

Europe Markets Review

In London FTSE 100 Index closed higher 97.18 or 1.9% to 5,293.99, in Paris CAC 40 Index increased 77.62 or 2.1% to close at 3,872.06, in Frankfurt DAX index higher 99.32 or 1.7% to close at 5,930.53. In Zurich trading SMI increased 40.12 or 0.6% to close at 6,504.44.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 41.42 or 0.41% to 10,183.47, and Hang Seng index in Hong Kong decreased 227.78 or 1.08% to 20,948.10, and CSI 300 index in China higher 4.89 or 0.14% to 3,396.62. ASX 200 index in Australia decreased 15.40 or 0.33% to 4,635.10. The FTSE Bursa KL Composite index in Malaysia was lower 11.31 or 0.89% to 1,255.66.

The Kospi Index in South Korea decreased 2.81 or 0.17% to close at 1,644.23. SET index in Thailand closed lower 0.51 or 0.07% to 715.17. JSE Index in Indonesia decreased 78.19 or 3.12% to 2,431.39. The Sensex index in India decreased 118.63 or 0.71% to 16,601.20.

Commodities, Metals, and Currencies

Crude oil decreased $0.89 to $72.47 a barrel for a front month contract, natural gas edged down 11 cents to $5.67 per mBtu and gasoline decreased 3.17 cents to 186.31 cents.

Soybean future closed down 11.50 cents to $10.08 a bushel. Wheat futures closed down 8.50 cents in Chicago trading to $5.19 a bushel. Sugar closed lower 0.72 cent 25.62 cents.

Gold decreased $18.30 in New York trading to close at $1,093.20 per ounce, silver closed down $0.30 to $17.02 per ounce and copper for the front month delivery increased 1.10 cent to $3.15 per pound.

Dollar closed higher against euro to $1.43 and edged higher against the Japanese yen to 91.75.

Yield on 10-year U.S. bonds increased to 3.68% and with 30-year maturities closed higher at 4.57%.