Metals and Oil Drop 5%

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

A sharp pullback in metals and commodities put stocks on the defensive. Front month futures of crude oil and gold dropped more than 5%, silver lost 8%, and copper declined 3%. Futures of the next month wheat led the agricultural with a decline of 7% followed by losses in Soybean and Cocoa of 6%. Dow, S&P 500, and Nasdaq lost more than 2.3%. Brazil plunged 5% and European markets edged 0.5% lower across the region.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – A sizable decline in precious metals and crude oil prices dragged stock averages lower. Brazil plunged 5%.[/R]

Global Markets Update

Visa, the largest payment card processing company priced its offering at $44 per share on Tuesday. The deal was expected to be priced between $37 and $42. The stock opened at $68 and quickly traded down to $59. Visa, in the largest public offering in the U.S., raised $17.9 billion and offered 406 million shares. The offering values the company at $42.5 billion. MasterCard, the second largest processor jumped to $215 in the morning trading.

Morgan Stanley reported revenue decline of 17% to $8.3 billion and earnings fall of 35% to $1.55 billion. Earnings per share declined to $1.45 from $2.17 in the first quarter of previous fiscal year. In the quarter Morgan wrote down $1.1 billion of sub-prime loans. Asset management group reported 5% increase in assets to $722 billion. Average broker at Morgan had $85 million of client assets and generated $761,000 in commissions.

Commodities declined as investors worried that a U.S. recession will hurt demand for precious and base metals, steel, copper, and crude oil and natural gas. Front month futures of crude oil and gold dropped more than 5%, silver lost 8%, and copper declined 3%. Futures of the next month wheat led the agricultural with a decline of 7% followed by losses in Soybean and Cocoa of 6%.

Stocks in Japan rallied tracking the gains in the U.S. Other Asian markets gained as well. The Federal Reserve Bank lowered its benchmark rate 0.75% to 2.25%, lowest in the last three years. The decision lifted financial stocks in Japan and across Asia. In Tokyo trading Nikkei 225 increased 2.48% or 296.28 to 12,260.44, and the broader Topix Index gained 2.8% or 32.67 to 1,196.30.

European Markets

In London FTSE 100 Index closed lower 60.20 or 1.07% to 5,545.60, in Paris CAC 40 Index decreased 26.64 or 0.58% to close at 4,555.95 and in Frankfurt DAX index lower 32.17 or 0.50% to close at 6,361.22. In Zurich trading SMI increased 59.12 or 0.84% to close at 7,072.99.

North American Markets indexes

Dow Jones Industrial Average declined 293.00 or 2.36% to a close of 12,099.66, S&P 500 closed down 32.32 or 2.43% to 1,298.42, and Nasdaq Composite Index declined 58.30 or 2.57% to a close at 2,209.96. In Toronto TSX Composite closed down 427.32 or 3.25% to 12,709.38.

Of the 30 stocks in Dow Jones Industrial Average, 1 closed higher, 29 closed lower, and none were unchanged.

Alcoa led the decliners in the index with a fall of 7.7% followed by losses in Chevron of 4.9%, in Exxon Mobil of 4.6%, and in DuPont of 4.21%. Coca Cola was the only gainers with a rise of 0.93%.

Of the stocks in S&P 500 index, 84 stocks increased, 414 declined, and none were unchanged. Of the stocks in the index, 161 stocks fell more than 3% and 10 gained more than 3%.

Discover Financial led the decliners in the index with a fall of 12.6% followed by losses in CIT Group of 12.4%, in Monsanto of 11.8%, and in Freeport McMoran of 11.24%, and in Merrill Lynch of 11.1%. Merrill Lynch, Bear Stearns, and Lehman Brothers along with National Oilwell Varco and Peabody Energy dropped 9%.

Freddie Mac led the gainers in the with a rise of 14.9% followed by increases in Adobe Systems of 9%, in Fannie Mae of 8.8%, and in National City of 8.7%.

South American Markets Indexes

In Latin Markets Brazil led the decliners in the region with a fall of 5.01% followed by decreases in Argentina of 3.25%, in Peru of 1.87%, and in Mexico of 1.51%. Colombia rose 0.13% and Venezuela added 0.65%.


Asian Markets

In Tokyo Nikkei 225 Index closed higher 296.28 or 2.48% to 12,260.44, in Hong Kong Hang Seng index increased 482.33 or 2.26% closed to 21,866.94. Australia ASX 200 index increased 203.00 or 3.99% to close 5,289.10. In Malaysia KL Composite index increased 6.52 or 0.55% closed to 1,186.54.

In South Korea Kospi Index increased 33.48 or 2.11% to close at 1,622.23, in Thailand SET index closed lower 4.65 or 0.57% to 807.67 and Indonesia JSE Index edged decreased 16.23 or 0.69% to 2,323.57. Sensex index in India increased 161.37 or 1.09% to 14,994.83.

Bond Yields decreased for 10-year U.S. bonds and closed at 3.34% and on 30-year bonds declined to close at 4.22%.

Commodities, Metals, and Currencies

Crude oil decreased $4.94 to close at $104.48 a barrel for a front month contract, natural gas decreased 37 cent to $9.04 per mBtu, and gasoline futures decreased 10.00 cents to close at 256.00 cents per gallon.

Gold decreased $59.00 in New York trading to close at $945.30 per ounce, silver closed down $1.515 cents to $18.445 per ounce, and copper for front month delivery decreased 11.30 cents to 363.35 per pound.

Wheat futures decreased 90.00 cents in Chicago trading and closed at $10.74 per bushel. Sugar decreased 59.00 cent to 11.69 cents per pound. Soybean future closed down 50.80 cents to $12.57 a bushel.

Dollar edged higher and traded near a record low against euro to $1.5604 and edged lower against yen to 98.89.