Financials Rebound, Inflation Surges

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

The market averages closed higher fighting a barrage of economic news. Inflation index in July rose at the sharpest pace of 0.8%, existing home sales fell in the month to a 10-year low, crude oil inventories declined and initial clamis of unemployment fell 10,000 to 450,000 at the end of last week. Stocks managed to rise as finacials, commodities and energy related companies closed higher. In Europe, euro zone inflation rose and economic growth turned negative. Inflation in India surged.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– Stocks in the U.S, Mexico and Europe closed higher on rising commodities price, volatile and rising inflation in Europe and in the U.S. Asian markets closed mixed with markets in India closing lower on record high inflation in recent years.[/R]

Global Markets Update

U.S. stocks fell after a sharp rise in inflation and weakening European economies. Consumer price index in July rose at 0.8% and so called core rate of inflation increased at 0.3%, above the target range of the Fed. The sharp increase in inflation, as measured by CPI, has increasingly been viewed as a lagging indicator and many people experience higher inflation that recorded by the index. European economies shrank in the second quarter at 0.2% after rising at 0.7% in the first quarter.

Stocks in Mumbai fell sharply after wholesale inflation at the end of the first week in August surged to a record high. The rising fuel and food prices contributed to the rise. The index had risen only 4% in the same period last year. The rise in inflation only firms the RBI stance in keeping the monetary policy tight. Banks and financial stocks fell. Automakers fell after the government indicated no plans to lower fuel prices, despite the recent declines.

UK stocks gained as much as 1.7% on a sharp rise in commodities stocks. The benchmark index closed up 0.9% after the release of inflation data in the U.S. Euro zone inflation reached 4% in the last month according to the latest data released today. British Air, American Airlines and Iberia signed a joint business tie up and plan to seek approval from the U.S. and European authorities. Barclays fell after analyst at Goldman Sachs estimated £1.5 billion of losses in the next 18 months.

North American Markets indexes

Dow Jones Industrial Average increased 82.97 or 0.72% to a close of 11,615.93, S&P 500 Index closed up 7.10 or 0.29% to 1,292.93, and Nasdaq Composite Index increased 25.05 or 1.03% to close at 2,453.67. In Toronto TSX Composite closed down 18.31 or 0.14% to 13,358.91.

Of the 30 stocks in Dow Jones Industrial Average 23 stocks gained, 6 declined and none was unchanged.

General Motors led gainers in the Dow Jones Industrial Average with a rise of 10.6% followed by increases in Bank of America of 4.5%, in American Express of 3.55%, in AIG of 3.55% and in Home Depot Inc of 2.45%.

Alcoa led decliners in Dow Jones Industrial Average with a loss of 1.25% followed by losses in Exxon Mobil Corp of 0.92%, in AT&T Inc of 0.58%, in Coca-Cola Company of 0.34%, in Hewlett Packard of 0.24% and in Johnson & Johnson of 0.01%.

Of the stocks in S&P 500 index, 359 increased, 138 declined and 3 were unchanged. Of the index stocks, 84 rose more than 3% and 7 fell more than 3%.

MBIA Inc led the gainers in the S&P 500 index with a rise of 17.9% followed by gains in Estee Lauder of 14%, in Liz Claiborne of 11.7%, in Gannett Company of 10.64%, in General Motors of 10.64% and in MGIC Investment Corp of 9.7%.

Constellation Energy led decliners in the S&P 500 index with a loss of 4.7% followed by losses in Sunoco Inc of 4.2%, in NetApp Inc of 4.09%, in Tesoro Corp of 3.69%, in ConocoPhillips of 3.60%, in Nucor Corp of 3.6% and in AES Corp of 3.13%.

South American Markets Indexes

Mexico led gainers in the Latin American markets with a rise of 1.38% followed by increases in Brazil of 1.04%, in Venezuela of 0.71% and in Chile of 0.34%.

Peru led decliners in the region with a loss of 1.6% followed by losses in Colombia of 0.7%, in Costa Rica of 0.7% and in Argentina of 0.29%.

Europe Markets Review

In London FTSE 100 Index closed higher 48.80 or 0.90% to 5,497.40, in Paris CAC 40 Index increased 17.94 or 0.41% to close at 4,420.91 and in Frankfurt DAX index higher 20.02 or 0.31% to close at 6,442.21. In Zurich trading SMI increased 12.96 or 0.18% to close at 7,206.46.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 66.25 or 0.51% to 12,956.80, Hang Seng index in Hong Kong increased 99.39 or 0.47% closed to 21,392.71. ASX 200 index in Australia increased 29.50 or 0.60% to close 4,981.10. The KL Composite index in Malaysia decreased 3.10 or 0.28% closed to 1,109.43.

The Kospi Index in South Korea increased 9.47 or 0.61% to close at 1,572.19, SET index in Thailand closed higher 4.00 or 0.57% to 705.60 and JSE Index in Indonesia increased 43.12 or 2.09% to 2,106.64. The Sensex index in India decreased 368.94 or 2.44% closed to 14,724.18.


Commodities, Metals, and Currencies

Crude oil decreased $1.06 to close at $114.94 a barrel for a front month contract, natural gas closed down 35 cents to $8.10 per mBtu and gasoline futures decreased 2.45 cents to close at 290.78 cents per gallon.

Gold decreased $20.00 in New York trading to close at $811.50 per ounce, silver closed down 67 cents to $14.31 per ounce and copper for the front month delivery decreased 3.25 cent to $3.3307 per pound.

Wheat futures closed up 14.25 cents in Chicago trading and closed at $8.89 a bushel. Sugar decreased 0.46 cent to 13.39 cents a pound. Soybean future closed down 10.00 cents to $12.74 a bushel.

Dollar edged higher and traded near record low against euro to $1.4822 and edged lower against yen to 109.68.

Yields on U.S. bonds decreased to 3.88% with 10 years of maturities and decreased to 4.51% with 30-year of maturities.