U.S. Techs Rebound; Record Inflation in Europe

123jump.com Staff
16 Jun, 2008
New York City

The U.S. dollar continued to drift lower in currency market as world leaders discuss the fate of the global economy. The dollar has lost nearly 60% of its value in the last three years. Crude oil traded at a intra-day record as investors looked for hedge against weak dollar. Inflation in the euro area rose to 3.7% in May from 3.3% in April on rising food and energy prices, a 16-year record. Lehman rebounded after it reaffirmed its reported a loss of $2.8 billion as estimated previously.

4:30PM New York, 10:30PM Frankfurt, 4:00AM Sydney[R]– Tech stocks rebounded after broader market struggled to edge higher in New York trading. Stocks in Europe and Latin markets closed lower. Crude oil surged to a new intra-day record as the dollar fell.[/R]

Global Markets Update

AIG replaces its chief executive for the second time in less than four years as its stock has lost 50% of its value and real estate linked losses mount. Robert Willumstad, former chief financial executive at Citigroup will assume the top position at AIG. The largest U.S. insurer has $1 trillion in assets and has reported two consecutive quarterly losses. The insurer was forced to raise $19 billion after denying for months that it needs additional capital.

Crude oil surged to another intra-day record high after a small fire at StatoilHydro curtailed production at its North Sea location for nine hours. The persistent weakness in the U.S. dollar also helped crude oil to trade near record level. Gold jumped $13 an ounce and natural gas rose 2%. AIG stock fell after its board removed Sullivan as chief executive. European market indexes closed lower, led by 1.4% decline in Spain index.

McClatchy Company stock fell to a 10-year low after it reported a sharp decline in revenue and announced a layoff of 1,400 staff. The local newspaper publisher has struggled as advertisers spend less in the print media and prefer lower cost alternative on the Internet. McClatchy consolidated revenue in May fell 15.1% and advertising revenue declined 16.6% compared to a year ago. For the year-to-date revenue declined 14.2% to $833 million from $972 million a year ago.

Sensex index in India rose 1.4% after a week of volatile trading. Software exporters and bank stocks rose but stocks of vehicle manufacturing fell. The government increased excise duty on large cars and sport utility vehicles. Wholesale inflation in India at the end of May, but before the recent price increase in petrol rose to 8.75%. The inflation is now at seven-year high.

UK stocks edged lower after crude oil prices raced to another record intra-day price on a small fire in the North Sea oil field. The persistent weakness in the U.S. dollar lifted the crude oil prices higher. Home builders rose after several institutional investors showed an interest in building a framework to inject more capital in the home builders.

Industrial production in China rose at 16% in May after rising at a rate of 15.7% in April. Producer price jumped 8.2% in the month and consumer prices rose 7.7% during the period. Hong Kong reported first quarter growth in the GDP of 9.6% and after adjusting for inflation increased at 7.1%. Hong Kong industrial production fell 4.4% in the quarter.

North American Markets indexes

Dow Jones Industrial Average fell 38.27 or 0.31% to a close of 12,269.08, S&P 500 closed up 0.11 or 0.01% to 1,360.14, and Nasdaq Composite Index increased 20.28 or 0.83% to close at 2,474.78. In Toronto TSX Composite closed down 165.82 or 1.12% to 14,944.28.

Of the 30 stocks in Dow Jones Industrial Average, 14 closed higher, 16 closed lower, and none was unchanged.

Citigroup led the gainers in the Dow Jones Industrial Average with a rise of 2.1% followed by increases in Bank of America of 1.8%, in Alcoa of 1.04%, in JP Morgan Chase of 1.01%, and in Intel of 0.8%.

Verizon Communications led the decliners in the Dow Jones Industrial Average of 3% followed by declines in Coca-Cola Company of 2%, in General Motors of 1.64%, in AT&T of 1.6% and in Merck & Company of 1.44%.

Of the stocks in S&P 500 index, 270 stocks increased, 223 declined, and 7 were unchanged. Of the stocks in the index, 11 stocks fell more than 3% and 27 gained more than 3%.

Allied Waste led the decliners in the S&P 500 index with a fall of 7.5% followed by losses in the Hershey Company of 6.8%, in Textron of 6.5%, in Pepsi Bottling of 4.6%, in OfficeMax of 4%.

GameStop Corp led the gainers in the S&P 500 index with a rise of 7.6% followed by increases in Zions Bancorp of 5.9%, in RadioShack Corp of 5.8%, in MGIC Investment Corp of 5.8% and in H&R Block of 5.24%.

European Markets indexes

The CAC 40 declined 24.56 or 0.52% to 4,657.00 In Germany the DAX 30-index fell 35.44 or 0.81% to 6,729.88. Shares in Switzerland climbed as the Swiss Market index fell 23.10 or 0.32% to 7,238.27. The FTSE 100 fell 8.20 or 0.14% to 5,794.60.

South American Markets Indexes

Chile led the decliners in the Latin American markets with a fall of 1.15% followed by decreases in Venezuela of 0.62%, in Mexico of 0.15% and in Colombia of 0.14%.

Peru led the gainers in the region with a rise of 0.65% followed by increases in Argentina of 0.47% and in Brazil of 0.12%.

Asian markets

In Tokyo Nikkei 225 Index closed higher 380.64 or 2.72% to 14,354.37, in Hong Kong Hang Seng index increased 437.39 or 1.94% closed to 23,029.69. In Australia ASX 200 index lower 6.40 or 0.12% to close 5,371.70. In Malaysia KL Composite index increased 8.71 or 0.71% closed to 1,238.06.

In South Korea Kospi Index increased 13.47 or 0.77% to close at 1,760.82, in Thailand SET index closed higher 4.95 or 0.63% to 787.59 and Indonesia JSE Index edged decreased 0.38 or 0.02% to 2,398.04. Sensex index in India increased 206.20 or 1.36% to 15,395.82.

Commodities, Metals, and Currencies

Crude oil decreased $1.00 to close at $133.86 a barrel for a front month contract, natural gas increased 28 cents to $12.91 per mBtu, and gasoline futures decreased 3.51 cents to close at 342.75 cents per gallon.

Gold increased $13.20 in New York trading to close at $886.30 per ounce, silver closed up 67.5 cents to $17.24 per ounce, and copper for front month delivery increased 7.30 cent to $3.66 per pound.

Wheat futures decreased 5.250 cent in Chicago trading and closed at $8.94 per bushel. Sugar increased 45 cent to $12.38 per pound. Soybean future closed down 8.0 cents to $15.23 a bushel.

Dollar edged lower and traded near record low against euro to $1.5481 and rose against yen to 108.04.

Yields on U.S. bonds decreased to 4.24% with 10 years of maturities and increased to 4.78% with 30-year of maturities.