Banks Fall, Energy Stocks Rise; CME Up 5%

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

The familiar pattern of energy and financial stocks was in display during trading in New York. Financial stocks fell sharply and in the S&P 500 index 67 stocks fell more than 3% and 13 gained more than 3%. Financial stocks were the leading decliners with 9 out of the top 10 losers in the index. 123jump.com research indicated European banks may need additional $60 billion before the end of the year 2009.

4:30PM New York, 10:30PM Frankfurt, 4:00AM Sydney[R]– The familiar pattern played out again in the U.S. markets trading with the financial stocks leading the decliners and energy stocks leading the gainers. Banks fell sharply.[/R]

Global Markets Update

U.S. stocks gained in the morning after Goldman Sachs reported 12% rise in earnings to $2.09 billion or $4.58 per share on 11% fall in revenue. May producer price index rose 1.4% and housing starts fell in May. The starts fell 32% from a year ago or declined 3.3% from April. Housing completion rose 11% from April but fell 26% from a year ago.

U.S. stocks closed lower after an increase in producer price index and a continued weakness in new home construction dragged market indexes lower. Shipping lines and ocean freight companies led the gainers in trading as Baltic Dry Index rebounded. Crude oil closed lower. Banks fell after comments that banks may have to raise new capital cover recent losses. Zions Bancorp led the decliners in S&P 500 index after it estimated additional losses related to home loans. Goldman Sachs joined a chorus of bankers that suggest that the U.S. banks will need $65 billion to cover recent losses.

UK stocks edged higher despite a rise in CPI index and expectations of higher inflation towards the end of the year. CPI in May rose to nearly 10-year high to 3.3% and the Bank of England Governor King suggested higher inflation in the months to come. UK prices have risen 8% as retail fuel prices have increased 20% in the last five months.

Stocks in Europe closed higher on the optimism that a rise in earnings bodes well for the credit market. After the close Goldman Sachs joined other banks and said that banks in the U.S. may need to raise as much as $65 billion in capital. 123jump.com estimates that European banks will have to raise another $60 billion in capital to cover mounting losses in credit markets and in loans related to housing market.

Stocks in India rose after leading companies pre-paid higher taxes, lifting optimism for earnings for the current quarter. Banks, realty and industrial companies led the rally. In Mumbai trading, the 30-share BSE Sensex gained 2% or 301.08 at 15,696.90. On the National Stock Exchange CNX Nifty rose 1.8% or 80.5 to 4653.

The service sector in Japan rose 1.8% according to an index tracked by the MITE. The Ministry of Industry Trade and Economy said that the Indices of Tertiary Industrial Activity rose 1.8% in April to a seasonally adjusted 110.4. Information and communication segment surged by 9.6% and retail trade rose at 1.5%. Tokyo Dome Corp. led advancers in the Nikkei 225 index shares with a rise of 15.13% followed by rises in Denki Kagaku Kogyo KK of 6.9% and in Chiyoda Corp. of 4.9%.

Stocks in Hong Kong gained but in Shanghai continue to fall. In Shanghai trading CSI 300 Index fell 3.71% or 109.57 at 2,842.68. Hong Kong Monetary Authority reported yesterday that foreign assets of Hong Kong’s Exchange Fund declined by HK$6.3 billion from April to HK$1.19 trillion in May. Total investment in the first five months increased 26% to 4 trillion yen and real estate investment rose 32% to 951 billion yen.

North American Markets indexes

Dow Jones Industrial Average dropped 108.78 or 0.89% to a close of 12,160.30, S&P 500 closed down 9.21 or 0.68% to 1,350.93, and Nasdaq Composite Index decreased 17.05 or 0.69% to close at 2,457.73. In Toronto TSX Composite closed up 124.55 or 0.83% to 15,068.83.

Of the 30 stocks in Dow Jones Industrial Average, 3 closed higher, 27 closed lower, and none was unchanged.

Chevron led the gainers in the Dow Jones Industrial Average with a rise of 0.9% followed by gains in Exxon Mobil of 0.7% and in du Pont of 0.04%.

AIG led the decliners in the Dow Jones Index with a loss of 5% followed by losses in American Express of 4.3%, in Bank of America of 3.5% in General Motors of 2.5% and in Home Depot of 2.3%.

Of the stocks in S&P 500 index, 110 stocks increased, 385 declined, and 5 were unchanged. Of the stocks in the index, 67 stocks fell more than 3% and 13 gained more than 3%.

Zions Bancorp led the decliners in the S&P 500 index with a fall of 10.2% followed by losses in SunTrust of 8.8%, in Huntington Banc of 8.5%, in WaMu Inc of 7.8%, in Lehman Brothers of 7.5% and in Regions Financial of 7.4%.

CME Group led the gainers in the S&P 500 index with a rise of 5.3% followed by gains in Monsanto Company of 5%, in Wyeth of 4.8%, in Chesapeake Energy of 4.8%, in Noble Energy of 4.7% and in Sunoco Inc of 4.07%.

European Markets indexes

European stocks recover from last week losses resisting news of rising inflation in the euro area. UK inflation rose to a 10-year high in May and a day ago Eurostat reported 16-year high inflation in the euro area.

The CAC 40 gained 28.59 or 0.61% in to 4,686.70. In Germany the DAX 30-index advanced 66.28 or 0.98% to 6,796.16. Stocks in Switzerland climbed as the Swiss Market index gained 13.15 or 0.18% to 7,251.42. The FTSE 100 gained 67.30 or 1.53% to 5,861.00.

South American Markets Indexes

Brazil led the gainers in the Latin American markets with a rise of 1.71% followed by increases in Chile of 0.54%, in Peru of 0.56% and in Venezuela of 0.03%.

Argentina led the decliners in the region with a fall of 1.47% followed by decreases in Mexico of 1.41% and in Colombia of 1.12%.

Asian markets

In Tokyo Nikkei 225 Index closed lower 6.00 or 0.04% to 14,348.37, in Hong Kong Hang Seng index increased 28.30 or 0.12% closed to 23,057.99. In Australia ASX 200 index higher 51.00 or 0.95% to close 5,422.70. In Malaysia KL Composite index decreased 10.30 or 0.83% closed to 1,227.76.

In South Korea Kospi Index decreased 10.11 or 0.57% to close at 1,750.71, in Thailand SET index closed lower 10.42 or 1.32% to 777.17 and Indonesia JSE Index edged decreased 20.07 or 0.84% to 2,377.98. Sensex index in India increased 301.08 or 1.96% to 15,696.90.

Commodities, Metals, and Currencies

Crude oil decreased $0.95 to close at $133.66 a barrel for a front month contract, natural gas increased 5 cents to $12.98 per mBtu, and gasoline futures decreased 2.79 cents to close at 341.00 cents per gallon.

Gold increased $0.60 in New York trading to close at $886.90 per ounce, silver closed down 15.7 cents to $17.07 per ounce, and copper for front month delivery decreased 1.35 cent to $3.65 per pound.

Wheat futures increased 22.00 cent in Chicago trading and closed at $9.16 per bushel. Sugar decreased 16 cent to $12.43 per pound. Soybean future closed down 33.00 cents to $15.53 a bushel.

Dollar edged lower and traded near record low against euro to $1.5512 and fell against yen to 107.96.

Yields on U.S. bonds decreased to 4.20% with 10 years of maturities and decreased to 4.77% with 30-year of maturities.