Oil, Commodities Drop 5%; World Markets Fall

123jump.com Staff
04 Aug, 2008
New York City

Weak crude oil futures, agriculture commodities and metal prices dragged stocks lower in the U.S., Europe and Latin America. Crude dropped as much as 5% and most agriculture commodities fell between 3% and 7%. Gold, copper, silver and zinc dropped as well. Energy complex stocks fell as worries related to hurricane subsided. HSBC first half profit declined and in Japan Nissan and Olympus reported weaker than expected earnings.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– Crude oil futures fell as much as 5% before closing down 4% as hurricane veers away from oil fields and refineries in the Gulf of Mexico. Agriculture commodities dropped between 3% and 7%.[/R]

Global Markets Update

U.S. stocks fell after the release of June personal income, spending and savings data. The income in the month rose 0.6% but after adjusting for inflation fell 1.9%. Personal savings rate hovered near a low 2.5%. The PCE price index, a measure of prices paid by consumer rose 4.1% from a year ago and may increase in the coming months. Church & Dwight and Humana rose after the release of earnings.

TNK-BP chief financial officer Owen quits as shareholders continue to battle for control of the company. In London trading stocks fell on weak commodities and metals prices. Crude oil fell 3% in the session and base metals prices declined. Of the 102 FTSE 100 index stocks, 49 rose, 52 declined, and 1 was unchanged. Thomson Reuters led advancers in the index shares with a rise of 4.5% and Kazakhmys led decliners with a loss of 10%.

Stocks in Tokyo declined on global economic worries and weak earnings from Nissan and Olympus. The benchmark index Nikkei 225 fell 1.2% on weak commodities, auto and financial stocks. Nissan reported first quarter revenue fell 4% to 2.3 trillion yen and earnings declined 43% to 53 billion yen, despite a rise in unit sales of 7% to 936,000. Earnings at Olympus fell 63% to 6.5 billion yen on a fall in domestic sales of 13.5% to 84 billion yen.

Stocks in Shanghai and Hon Kong dropped sharply after the global markets worried persisted in trading. Benchmark indexes in Hong fell 1.5% and in Shanghai dropped 2.4%. Service industry index rose 1.2% in July on rising construction activities ahead of the Olympic Games in Beijing. HSBC operating revenue fell 2% and earnings in the first half dropped 29% on 58% rise in loan loss provision in the period. Stocks of shipping lines and steel makers fell on the expectations of weak demand.

Stocks in Mumbai edged lower on a weak trading in the region. Elevated crude oil prices, persistent worries related to the U.S. economic health and rising inflation in India kept investors on the sidelines. Total trading on the BSE and NSE fell 10% from Friday to 20,000 crore rupees. Grasim Industries led the gainers in the benchmark Sensex index with a rise of 3.5% and TCS led the decliners with a fall of 2.6%. Cement stocks gained, despite a price freeze and weak demand in the current quarter.

North American Markets indexes

Dow Jones Industrial Average decreased 42.17 or 0.37% to a close of 11,284.15, S&P 500 closed down 11.29 or 0.90% to 1,249.02, and Nasdaq Composite Index decreased 25.40 or 1.10% to close at 2,285.56. In Toronto TSX Composite closed down 96.38 or 0.71% to 13,496.53.

Of the 30 stocks in Dow Jones Industrial Average 12 stocks gained, 17 declined and one was unchanged.

Exxon Mobil led the decliners in the Dow Jones Index with a fall of 4.05% followed by decreases in Alcoa Inc of 3%, in E.I. duPont of 2.56% and in Bank of America of 2.04%.

Pfizer led gainers in the Dow Jones Industrial Average with a rise of 1.9% followed by increases in Procter & Gamble of 1.60%, in Coca Cola Company of 1.50%, in Johnson & Johnson of 1.4% and in McDonalds Corp of 1.5%.

Of the stocks in S&P 500 index, 204 increased, 289 declined and 7 were unchanged. Of the index stocks 23 stocks rose more than 3% and 68 fell more than 3%.

Range Resources led the decliners in the S&P 500 index with a loss of 12.5% followed by losses in Massey Energy Company of 12.2%, in Freeport McMoran of 11.8%, in IntercontinentalExchange of 11.4%, in Manitowoc Company of 10.3%, in Cabot Oil & Gas of 9.5% and in Wachovia Corp of 9.4%.

Motorola Inc led the gainers in the S&P 500 index with a rise of 11.4% followed by gains in Eastman Kodak of 6.4%, in Hartman International of 5.5%, in Sears Holdings of 5.2%, in Cigna Corp of 5.2% and in Aetna Inc of 5.13%.

South American Markets Indexes

Argentina led decliners in the Latin American markets with a fall of 3.8% followed by decreases in Brazil of 3.46%, in Peru of 2.32%, in Mexico of 1.75% and in Colombia of 1.5%, in Chile of 0.86% and in Venezuela of 0.13%.

Europe Markets Review

In London FTSE 100 Index closed lower 34.50 or 0.64% to 5,320.20, in Paris CAC 40 Index decreased 33.71 or 0.78% to close at 4,280.63 and in Frankfurt DAX index lower 46.65 or 0.73% to close at 6,349.81. In Zurich trading SMI decreased 62.99 or 0.88% to close at 7,078.22.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 161.41 or 1.23% to 12,933.18, Hang Seng index in Hong Kong decreased 347.68 or 1.52% closed to 22,514.92. ASX 200 index in Australia decreased 16.30 or 0.33% to close 4,887.70. The KL Composite index in Malaysia decreased 10.42 or 0.90% closed to 1,148.68.

The Kospi Index in South Korea decreased 30.72 or 1.95% to close at 1,543.05, SET index in Thailand closed lower 3.99 or 0.59% to 674.67 and JSE Index in Indonesia decreased 21.08 or 0.94% to 2,227.68. The Sensex index in India decreased 78.82 or 0.54% to 14,577.87.

Commodities, Metals, and Currencies

Crude oil decreased $4.19 to close at $120.91 a barrel for a front month contract, natural gas closed down 70 cents to $8.69 per mBtu and gasoline futures decreased 9.27 cents to close at 299.16 cents per gallon.

Gold decreased $14.20 in New York trading to close at $903.30 per ounce, silver closed down 51 cents to $17.005 per ounce and copper for front month delivery decreased 14.25 cent to $3.430 per pound.

Most agriculture commodities fell between 3% and 7% as crude oil futures fell. Cocoa futures dropped 7.1% followed by losses in Soybean, sugar and corn trading. Wheat futures closed down 35.25 cents in Chicago trading and closed at $7.58 per bushel. Sugar decreased 0.71 cent to 13.42 cents per pound. Soybean future closed down 70.00 cents to $12.95 a bushel.

Dollar edged lower and traded near record low against euro to $1.5586 and edged lower against yen to 108.24.

Yields on U.S. bonds increased to 3.95% with 10 years of maturities and decreased to 4.58% with 30-year of maturities.