Metals, Oil Fall as Dollar Rises

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

Commodities fell sharply in the morning trading after dollar rose and sentiment improves in the favor of the currency. Gold 3% to $772 before recovering to $791 an ounce but silver dropped 11%, platinum declined 9% and crude oil fell 2%. U.S. stocks are expected to open mix as dollar continues to climb from its lows against euro and pound. The pound has lost nearly 5.5% in the last two weeks of trading.

[R]9:00AM New York – Commodities fall as dollar rebounds. UK pound falls for the second week in a row.[/R]

Commodities prices fell sharply in the morning trading in New York as dollar continues to rise against European and UK currencies. Gold dipped 4% to as low as $772 an ounce, silver fell 11% to $12.55, platinum dropped 9% or $122 to $1,365 and crude oil declined 2% to $112.65 a barrel.

The sharp reversal in the dollar trading has dragged commodities prices lower as sentiment on trading desk changes. The weaker than expected outlook in Euro zone and in the UK and elevated inflation in the region has limited the ability of the central banks to lower interest rates. Japan recorded its first quarterly economic decline and China and India fight inflation at twice the target levels set by the central banks.

British pound continued to decline for the second week in a row against dollar and euro. The decline in the value of the UK currency comes in the wake of falling tourist receipts, dropping home prices and retail sales and lack of growth in the export.

The pound fell 0.48% in the morning trading against the dollar to $1.8569 and for the week lost 3.4% in the week after dropping another 2% in the previous week. The pound traded at 79.15 pence against a euro, a fall of 1.3% from its yesterday’s close.

Expectations of weak economy and falling unemployment have forced currency traders to rethink their strategy. Inflation is on the rise in the UK and reached 4.4% in July, just home prices fell from the record high and unemployment rose in the month.

The pound still trades at a significant premium to dollar and euro and may fall further before it stabilizes.

UK treasury may collect lower revenue from the financial services sector as companies declare loses. Merrill Lynch booked losses in subprime and other asset backed securities through its UK subsidiary. The loss of $29 billion, most of it recorded this year will help the broker to avoid paying taxes in the UK for at least five to six years. The information was disclosed in the latest filing with the SEC and first reported in the Financial Times Web site.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 62.61 or 0.48% to 13,019.41, Hang Seng index in Hong Kong decreased 232.13 or 1.09% closed to 21,160.58. ASX 200 index in Australia increased 0.60 or 0.01% to close 4,981.70. The KL Composite index in Malaysia decreased 14.38 or 1.30% closed to 1,095.05.

SET index in Thailand closed higher 1.88 or 0.27% to 707.48 and JSE Index in Indonesia decreased 21.49 or 1.02% to 2,085.15. Market of South Korea and India were closed today.

Europe Markets Review

In London FTSE 100 Index traded lower 0.50 or 0.01% to 5,496.90, in Paris CAC 40 Index increased 43.53 or 0.98% to 4,464.44 and in Frankfurt DAX index traded lower 6.99 or 0.11% to 6,435.22. In Zurich trading SMI increased 17.82 or 0.25% to 7,224.28.

Earnings Review

Agilent Technologies, Inc, a scientific instruments and analysis equipment maker said third quarter revenues climbed 5% to $1.44 billion from $1.37 billion a year ago. Net income in the quarter fell 9% to $169 million or 45 cents per diluted share compared to net income of$185 million or 45 cents per share, a year ago.

Agilent Technologies, Inc ((A)) in the last one year traded as high as $39.32 in October 2007 and as low as $28.79 in April 2008. Based on the yesterday’s closing price the company has a market cap of $13.03 billion.

Autodesk, Inc, a maker of computer-aided design software said second quarter revenues rose 18% to $619.5 million from $525.9 million a year ago. Net income in the quarter fell 2% to $89.8 million or 39 cents per diluted share compared to net income of$91.6 million or 38 cents per share, a year ago.

Autodesk, Inc ((ADSK)) in the last one year traded as high as $51.32 in December 2007 and as low as $29.58 in March 2008. Based on the yesterday’s closing price the company has a market cap of $7.69 billion.

Kohl’s Corporation, department store chain said second quarter sales rose 3.8% to $3.7 billion from $3.5 billion a year ago. Net income in the quarter fell 12% to $236 million or 77 cents per diluted share compared to net income of$269.2 million or 83 cents per share, a year ago.

Comparable store sales for the quarter decreased 4.6%.

Kohl’s Corporation ((KSS)) in the last one year traded as high as $63.97 in August 2007 and as low as $36.81 in January 2008. Based on the yesterday’s closing price the company has a market cap of $14.81 billion.

Nordstrom, Inc, upscale department store chain said second quarter sales fell 4.3% to $2.29 billion from $2.39 billion a year ago. Net income in the quarter declined 21% to $143 million or 65 cents per diluted share compared to net income of $180 million or 71 cents per share, a year ago.

Second quarter same-store sales decreased 6.0%.

Nordstrom, Inc ((JWN)) in the last one year traded as high as $52.52 in September 2007 and as low as $25.67 in July 2008. Based on the yesterday’s closing price the company has a market cap of $6.55 billion.