Fannie, Freddie Down; Oil Falls, Stocks Rise

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

Investors appear to rotate out of financials, energy complex and mining companies stocks and prefer stocks in retail and transportation sectors. Crude oil dropped as war raged between Russia and Georgia. Retailers advacned in New York and European trading with Amazon.com, Nordstrom, Wal-Mart and Target closing higher. In the UK Marks & Spencer, Next and DSG closed up. Latin American markets fell sharply with Argentina falling nearly 4%.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– Retailers and transportation sectors rose sharply in the U.S. and Europe as crude oil prices fell. Miners and energy stocks weakness dragged most Latin American markets benchmarks lower. Argentina dropped 4% after the rating downgrade.[/R]

Global Markets Update

Crude oil edged higher as Russia continues its campaign of bombing in the neighboring state of Georgia. The heavy response from Russia forced Georgia to seek help from EU and the U.S. and requested a cease fire. Crude oil rose in European trading before the U.S. markets open but most of the gains were pared after the first hour of trading in New York. China trade surplus rose in July. Retailers, airlines and transportations stocks rose but stocks in energy, finance and mining sectors fell.

UK stock indexes rose fractionally after Wolseley led retailers higher and crude oil prices fell despite the simmering conflict between Russian and Georgia. The conflict if widens may disrupt energy supplies in Europe. The conflict if widens may disrupt energy supplies to Germany and Italy. The producer price index rose 10% in the year to June. Ireland home prices fell 0.6% in June from May and fell 5% from a year ago.

A fall in crude oil price in the region and higher close in New York on Friday lifted market sentiment in Tokyo. Benchmark index added 2% on active trading. Bankruptcies in Japan rose 13% in July on tighter lending conditions and net properties purchased by real estate trusts fell 50% to 94 in the first half of this year. Hitachi Zosen led advancers with a rise of 12% and Itochu led decliners with a loss of 4%.

Stocks in Shanghai fell 5% for the second trading day in a row and in Hong Kong edged lower as producer price index surges to 10% in July in China. In the morning stocks rose as crude oil prices fell but stocks quickly fell after the release of inflation report. The rising food, energy and raw materials cost dragged market averages lower. Prices of food rose 9% and prices of mined products rose 34% from a year ago. A planned sale of a stake in China Eastern Airlines to Singapore controlled fund to the national carrier fell.

North American Markets indexes

Dow Jones Industrial Average increased 48.03 or 0.41% to a close of 11,782.35, S&P 500 closed up 9.00 or 0.69% to 1,305.32, and Nasdaq Composite Index increased 25.85 or 1.07% to close at 2,439.95. In Toronto TSX Composite closed down 138.55 or 1.04% to 13,203.19.

Of the 30 stocks in Dow Jones Industrial Average 18 stocks gained, 12 declined and none was unchanged.

General Motors led gainers in the Dow Jones Industrial Average with a rise of 7.2% followed by increases in Home Depot of 4.3%, in American Express of 3.60%, in Bank of America of 3.50% and in AT&T of 2.80%.

Boeing led decliners in Dow Jones Industrial Average with a loss of 1.83% followed by losses in IBM of 1.72%, in Alcoa Inc of 1.7%, in AIG of 1.6%, in Microsoft of 0.8%, in Exxon Mobil of 0.7% and in Chevron Corp of 0.4%.

Of the stocks in S&P 500 index, 357 increased, 137 declined and 6 were unchanged. Of the index stocks, 87 rose more than 3% and 12 fell more than 3%.

Amazon.com Inc led the gainers in the S&P 500 index with a rise of 9.4% followed by gains in Kohls Corp of 8.8%, in Starbucks Corp of 7.8%, in Nordstrom Inc of 7.67%, in Abercrombie & Fitch of 7.40% and in General Motors of 7.30%.

Fannie Mae led decliners in the S&P 500 index with a loss of 7.2% followed by losses in U.S. Steel Corp of 6.7%, in Peabody Energy of 5.8%, in Freddie Mac of 5.08%, in Massey Energy of 5.00%, in Newmont Mining of 4.8% and in Union Pacific Corp of 4.72%.

South American Markets Indexes

Argentina stock benchmark dropped sharply as inflation worries dragged stocks in the region lower. Brazilian stocks fell as rising steel exports from China worried local investors and falling prices of agriculture products and metals in the international markets lowered profit expectations.

Argentina led decliners in the Latin American markets with a fall of 3.81% followed by decreases in Brazil of 3.29%, in Peru of 3.07%, in Chile of 1.3%, in Venezuela of 1.04% and in Colombia of 0.38%.

Europe Markets Review

In London FTSE 100 Index closed higher 52.60 or 0.96% to 5,541.80, in Paris CAC 40 Index increased 46.64 or 1.04% to close at 4,538.49 and in Frankfurt DAX index higher 47.98 or 0.73% to close at 6,609.63. In Zurich trading SMI increased 75.63 or 1.04% to close at 7,337.73.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 262.50 or 1.99% to 13,430.91, Hang Seng index in Hong Kong decreased 25.87 or 0.12% closed to 21,859.34. ASX 200 index in Australia increased 39.90 or 0.80% to close 5,026.10. The KL Composite index in Malaysia increased 7.15 or 0.64% closed to 1,127.46.

The Kospi Index in South Korea increased 12.37 or 0.79% to close at 1,581.09, SET index in Thailand closed higher 12.23 or 1.77% to 702.93 and JSE Index in Indonesia decreased 62.01 or 2.82% to 2,133.92. The Sensex index in India increased 336.10 or 2.22% closed to 15,503.92.

Commodities, Metals, and Currencies

Crude oil decreased $0.70 to close at $114.50 a barrel for a front month contract, natural gas closed up 17 cents to $8.42 per mBtu and gasoline futures decreased 1.54 cents to close at 287.20 cents per gallon.

Gold decreased $34.90 in New York trading to close at $829.90 per ounce, silver closed down 66 cents to $14.67 per ounce and copper for the front month delivery decreased 2.60 cent to $3.30 per pound.

Wheat futures closed up 28.25 cents in Chicago trading and closed at $8.18 a bushel. Sugar decreased 0.19 cent to 13.37 cents a pound. Soybean future closed up 15.50 cents to $11.96 a bushel.

Dollar edged higher and traded near record low against euro to $1.4908 and edged higher against yen to 110.08.

Yields on U.S. bonds increased to 3.99% with 10 years of maturities and increased to 4.60% with 30-year of maturities.