Stocks Up 3%, Gold Down; Cisco Up

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

The Fed decision to leave rates unchanged only fueled fires to the rally that was already in progress by mid-day. S&P 500, Nasdaq and Dow rose near 3% in the hope that rates will remain low for the rest of the year. The Fed in its commnets said that econoy remains weak but inflation is likely to fall in coming months. European markets closed higher but Canada fell and Latin American markets closed up. Cisco closed up in after hours on revenue rise that met expectations.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– The U.S. Fed left its key rate unchanged and cited weak economy. God and crude oil fell and dollar edged higher. European markets closed higher.[/R]

Global Markets Update

U.S. stocks rose sharply before the rate decision and extended their gains after the Fed left its key rate unchanged at 2%. The Fed suggested in the accompanying statement that economy is likely to remain weak for the rest of the year as credit remains tight, energy prices are at elevated levels and weakness in housing market persists. The Fed suggested that while commodities prices are high and are likely to remain volatile but inflation is likely to fall in the coming quarters.

U.S. stocks edge higher in the morning trading after a drop in crude oil and agriculture commodities. Crude dropped 1% to $119 a barrel and cocoa, corn and soybean lost 2%, decline for the second day in a row. Copper and lead in New York trading lost 4% but recovered from the lows of the day. In earnings news, Procter & Gamble reported better than expected earnings.

Stock benchmark in Mumbai surged 2.6% on a drop in crude oil and metal prices for the second day in a row. Auto stocks led the gainers in the session with Maruti Suzuki rising 8.4% and Tata Motors adding 3.7%. Bank and real estate companies stocks closed higher on the expectations of financial reforms that will allow foreign investors to increase their holding in insurance companies and banks. ACC and Ambuja Cements rose more than 5%.

Stocks in Japan edged lower as futures of crude oil and base metal prices declined. Paper, rubber and transportation companies rose but stocks of commodities trading and refining companies fell. In merger news, Orix and Credit Saison are exploring merger to form the largest non-bank financial company in Japan with asset of 11 trillion yen. Steel companies stocks fell on the worries that demand may decline in the second half of the year.

Stocks in Shanghai and in Hong Kong fell sharply on the weakness in financial stocks and export worries to the U.S., the largest market for Chinese products. The benchmark indexes fell 2.5% in Hong Kong and Shanghai. Weak results from banks dragged financial stocks lower. Export Import Bank of China reported that non-performing loan ratio declined to 1.8% from 2.4%. Bank of East Asia interim profit declined 52% on losses related to credit markets.

North American Markets indexes

Dow Jones Industrial Average increased 331.62 or 2.94% to a close of 11,615.77, S&P 500 closed up 35.87 or 2.87% to 1,284.88, and Nasdaq Composite Index increased 64.27 or 2.80% to close at 2,349.83. In Toronto TSX Composite closed down 254.33 or 1.88% to 13,242.20.

Of the 30 stocks in Dow Jones Industrial Average 29 stocks gained, 1 declined and none was unchanged.

AIG led gainers in the Dow Jones Industrial Average with a rise of 12.0% followed by increases in Boeing of 6.3%, in General Motors of 5.80%, in Citigroup Inc of 5.8% and in American Express of 5.1%. Chevron Corp was the lone decliner with a fall of 0.37%.

Of the stocks in S&P 500 index, 456 increased, 42 declined and 2 were unchanged. Of the index stocks 249 stocks rose more than 3% and 6 fell more than 3%. Twelve stocks rose more than 10%.

Fannie Mae led the gainers in the S&P 500 index with a rise of 14.9% followed by gains in Lehman Brothers of 12.8%, in Goodyear Tire of 12.2%, in AIG of 12%, in Capital One Financial of 11.5% and in Wachovia Corp of 11.40%.

Molson Coors led the decliners in the S&P 500 index with a loss of 11.5% followed by losses in Tenet Healthcare of 8.2%, in Archer Daniels Midland of 5.6%, in Newmont Mining of 5.1%, in AK Steel Holding of 3.65%, in Nabors Industries Ltd. of 3% and in Motorola Inc of 9.4%.

South American Markets Indexes

Mexico led gainers in the Latin American markets with a rise of 1.6% followed by increases in Brazil of 1.6%, in Chile of 0.55%, in Venezuela of 0.37% and in Colombia of 0.1%.

Peru fell 1.6% and Argentina declined 0.2%.

Europe Markets Review

In London FTSE 100 Index closed higher 134.50 or 2.52% to 5,454.50, in Paris CAC 40 Index increased 105.72 or 2.47% to close at 4,386.35 and in Frankfurt DAX index higher 168.89 or 2.66% to close at 6,518.70. In Zurich trading SMI increased 112.56 or 1.59% to close at 7,190.78.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 18.52 or 01.14% to 12,914.66, Hang Seng index in Hong Kong decreased 565.17 or 2.51% closed to 21,949.75. ASX 200 index in Australia decreased 67.30 or 1.38% to close 4,820.40. The KL Composite index in Malaysia decreased 19.82 or 1.73% closed to 1,128.86.

The Kospi Index in South Korea decreased 7.51 or 0.49% to close at 1,535.54, SET index in Thailand closed lower 7.55 or 1.12% to 667.12 and JSE Index in Indonesia decreased 42.06 or 1.89% to 2,185.62. The Sensex index in India increased 383.20 or 2.63% to 14,961.07.

Commodities, Metals, and Currencies

Crude oil decreased $2.83 to close at $118.58 a barrel for a front month contract, natural gas closed down 4 cents to $8.68 per mBtu and gasoline futures decreased 5.85 cents to close at 294.17 cents per gallon.

Gold decreased $25.40 in New York trading to close at $882.50 per ounce, silver closed down 66 cents to $16.48 per ounce and copper for front month delivery decreased 0.55 cent to $3.4345 per pound.

Most agriculture commodities fell between 1% and 2% as crude oil futures fell. Cocoa futures dropped 2.1% followed by losses in Soybean and corn trading. Wheat futures closed up 21.25 cents in Chicago trading and closed at $7.80 per bushel. Sugar increased 0.51 cent to 13.93 cents per pound. Soybean future closed down 26.00 cents to $12.69 a bushel.

Dollar edged higher and traded near record low against euro to $1.5454 and edged lower against yen to 108.27.

Yields on U.S. bonds increased to 4.02% with 10 years of maturities and increased to 4.64% with 30-year of maturities.