Oil Nears $105; Ambac Drops 19%

123jump.com Staff
05 Mar, 2008
New York City

A rally in oil and commodities lifted U.S. market averages. Oil surged to a new high after Colombia and Venezuela moved army closer to their borders, weekly inventories in the U.S. declined at the end of last week, and OPEC left the production target unchanged. Earlier, an index of service indicator showed lower than expected decline in service activities. Ambac fell19% after it stated that its plan to raise $1.5 billion through a public offering of stocks that does not include banks.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – Crude oil surged 5% on border dispute between Venezuela and Colombia. Ambac’s plan to raise capital of $1.5 billion failed to convince investors that the company has enough capital to preserve its top bond rating.[/R]

U.S. stocks rebounded in the morning trading after the release of ISM service index. The February measure showed a lower decline compared to January decline. OPEC left its production quota unchanged after a meeting and indicated that there is no sign of demand slack. Crude oil jumped 2%. Big Lots surged 23% after beating the earnings expectations and increasing the earnings guidance for 2008.

The Bank of Japan meets on Friday to discuss interest rate for the last time before the current governor term expires.

Capital spending in the fourth quarter declined 7.3% as businesses curtailed their budget. The higher than expected decline in spending and rising worries related to subprime losses in Japan dragged market averages lower. Nikkei 225 index declined 0.16% or 20.22 to 12,972.06. Of the index stocks, 124 stocks declined and 89 gained. Marubeni led the gainers in the index with a rise of 8.5% and Okuma Corp led the decliners with a loss of 4.6%.

Hong Kong stocks continue to struggle ahead of a large public offering from insurer Ping An. Hang Seng index is now down 30% from its peak in October 2007. Telecom stocks rallied ahead of the expected consolidation. Mobile operators China Mobile added 0.5% and China Unicom increased 7.5%. China Telecom increase 2.5%, while China Netcom climbed 6.2%.

European Markets

In London FTSE 100 Index closed higher 85.80 or 1.49% to 5,853.50, in Paris CAC 40 Index increased 80.51 or 1.72% to close at 4,756.42 and in Frankfurt DAX index higher 138.67 or 2.12% to close at 6,683.71. In Zurich trading SMI increased 62.87 or 0.86% to close at 7,338.82.

North American Markets indexes

Dow Jones Industrial Average added 41.19 or 0.34% to a close of 12,254.99, S&P 500 closed up 6.95 or 0.52% to 1,333.70, and Nasdaq Composite Index traded up 12.53 or 0.55% to a close of 2,272.81. In Toronto TSX Composite closed higher 126.51 or 0.94% to close at 13,603.32.

Of the 30 stocks in Dow Jones Industrial Average, 18 closed higher, 12 closed lower, and none was unchanged.

Bank of America led the decliners in the index with a fall of 3.2% followed by losses in AIG of 2.7%, in Merck of 1.2%, and in JP Morgan of 1.1%. Chevron led the gainers in the index with a rise of 2.4%, in Microsoft 1.9%, and in Alcoa of 1.87%.

Of the stocks in S&P 500, 317 closed higher, 181 fell, and 2 were unchanged. Of the index stocks, 15 rose more than 3% and 17 stocks fell more than 3%.

Ambac Financial led the decliners in the index with a loss of 19% followed by declines in Fannie Mae of 6.5%, in MBIA of 6.2%, in King Pharmaceuticals of 5.2%, and in First Horizon of 4.95%. Big Lots led the gainers in the index with a rise of 22% followed by gainers in Tyson of 8.5%, in Clear Channel of 6.1%, in Dillards of 6%, and in Autodesk of 5.4%.

South American Markets Indexes

In Latin Markets Colombia led the gainers in the region with a surge of 5.20% followed by increases in Argentina of 2.23%, in Peru of 1.67%, in Brazil of 1.53%, and in Chile of 1.03%. Mexico gained 0.06% and Venezuela declined 0.25%.

Asian Markets

In Tokyo Nikkei 225 Index closed lower 20.22 or 0.16% to 12,972.06, in Hong Kong Hang Seng index decreased 5.53 or 0.02% closed to 23,114.34. Australia ASX 200 index decreased 3.70 or 0.07% to close 5,376.60.

In South Korea Kospi Index increased 0.92 or 0.05% to close at 1,677.10, in Thailand SET index closed lower 6.43 or 0.77% to 824.98 and Indonesia JSE Index edged increased 4.90 or 0.19% to 2,639.65. Sensex index in India increased 202.19 or 1.24% to 16,542.08.


Bond Yields increased on 10-year U.S. bonds to 3.70% and on 30-year bonds declined to 4.61%.

Commodities, Metals, and Currencies

Crude oil increased $4.91 to close at $104.34 per barrel for a front month contract, natural gas increased 40 cent to $9.76 per mBtu, and gasoline futures increased 10.04 cents to close at 262.95 cents per gallon.

Gold increased $22.20 in New York trading to close at $988.50 per ounce, silver closed up 94 cents to $20.78 per ounce, and copper for front month delivery increased 16.05 cents to 389.20 per pound.

Wheat futures increased 17.50 cents in Chicago trading and closed at $11.05 per bushel. Sugar increased 8 cent to 14.44 cents per pound. Soybean future closed down 2.250 cents to $15.08 per bushel.

Dollar edged lower and traded at a record low against euro to $1.5267 and edged higher against yen to 104.07.