Resource Stocks Rally

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

U.S. stocks traded sideways under the shadow of a likely bailout of Freddie Mac and Fannie Mac. Both lenders fell sharply on the growing belief that stock holders may be wiped out if the U.S. Treasury injects cash in the company. European markets edged higher on a rise in metal and oil prices. ArcelorMittal agreed to acquire a port and iron ore miner in Brazil for $810 million. Brazil, Peru and Canada soared. Hong Kong and Shanghai surged on expectations of stimulus package in China.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– U.S. market traded up, down and up on increasing belief that Fannie Mae and Freddie Mac bailout will wipe out current shareholders. Brazil and Peru surged on rising metal prices. Hong Kong and Shanghai increased on a speculation of fiscal stimulus from China.[/R]

Global Markets Update

The Competition Commission today blamed BAA Ltd for poor services and air delays and may order the company to sell Gatwick or other airports. Selling the airports is not likely to solve any problems at the airport unless new runways are added. The Ferrovial SA unit disagreed with the assessment. London Heathrow Airport is one of the most expensive airports in the world to fly or transit through and has one of the worst delays in last one year.

Stocks in Tokyo fell as traders could not shake off persistent worries related to the health of the U.S. financial companies. Lehman Brothers may be forced to sell assets and mark down financial assets of $4 billion in its upcoming earnings scheduled next week. Shippers in Asia and in Japan fell after the freight rate index fell. Slower demand in the U.S. is likely to force Toyota to lower its unit sales target to 9.5 million.

China increased the prices paid to power plants by grid operators for the second time in two months. The 6% increase was lower than required to maintain profitability and power companies stocks fell. The largest grid operator State Grid Corp of China hopes that China will allow it to pass on the hike to customers to stem losses. Banks, insurance realty and energy companies in Hong Kong trading surged.

India extended time deadline foreign investors to trim their holdings in commodities exchanges below 49% or below 5% for a single investment entity to June 2009. NYSE Euronext, Citigroup and Merrill Lynch each own 5% stake in the MCX and Goldman Sachs own 7% in NCDEX. Cell phone and other telecom operators rose after the telephone regulator permitted Internet based discount telephone services. Bharti Airtel and Reliance Communication rose on the hopes that revenue impact will be marginal.

North American Markets indexes

Dow Jones Industrial Average increased 68.88 or 0.61% to a close of 11,417.43, S&P 500 Index closed up 7.86 or 0.63% to 1,274.55, and Nasdaq Composite Index increased 4.72 or 0.20% to close at 2,389.08. In Toronto TSX Composite closed up 283.62 or 2.17% to 13,347.47.

Of the 30 stocks in Dow Jones Industrial Average 16 stocks gained, 13 declined and one was unchanged.

Intel led decliners in Dow Jones Industrial Average with a loss of 1.02% followed by losses in 3M Company of 0.94%, in Procter & Gamble of 0.92%, in General Electric 0.76%, in E.I. duPont of 0.75% and in Merck & Company of 0.74%.

Hewlett Packard led gainers in the Dow Jones Industrial Average with a rise of 5.93% followed by increase in Bank of America of 3.35% and JP Morgan Chase of 2.73% and in Alcoa Inc of 2.03%.

Of the stocks in S&P 500 index, 286 increased, 212 declined and 2 were unchanged. Of the index stocks, 44 rose more than 3% and 17 fell more than 3%.

SLM Corp led the gainers in the S&P 500 index with a rise of 10.43% followed by gains in XTO Energy Inc of 7.46%, in Freeport-McMoran of 6.81%, in National Oilwell Varco of 6.7%, in CIT Group Inc of 6.41% and in Devon Energy of 6.24%.

Fannie Mae led decliners in the S&P 500 index with a loss of 25% followed by losses in Freddie Mac of 22.54%, in Analog Devices of 9.3%, in Sovereign Bancorp of 7.4%, in Gannett Company of 6.70%, in MGIC Investment Corp of 6.3% and in MBIA Inc of 6.2%.

South American Markets Indexes

Brazil led gainers in the Latin American markets with a rise of 3.33% followed by increases in Peru of 2.19%, in Colombia of 0.67%, in Argentina of 0.5%, in Mexico of 0.3% and in Venezuela and Chile of 0.18%.

Europe Markets Review

In London FTSE 100 Index closed higher 51.40 or 0.97% to 5,371.80, in Paris CAC 40 Index increased 33.08 or 0.76% to close at 4,365.87 and in Frankfurt DAX index higher 35.37 or 0.56% to close at 6,317.80. In Zurich trading SMI decreased 15.17 or 0.21% to close at 7,100.01.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 13.36 or 0.10% to 12,851.69, Hang Seng index in Hong Kong increased 446.89 or 2.18% closed to 20,931.26. ASX 200 index in Australia increased 63.10 or 1.30% to close 4,929.50. The KL Composite index in Malaysia increased 3.79 or 0.35% closed to 1,073.21.

The Kospi Index in South Korea decreased 0.70 or 0.05% to close at 1,540.71, SET index in Thailand closed lower 1.28 or 0.19% to 690.05 and JSE Index in Indonesia increased 27.20 or 1.33% to 2,069.70. The Sensex index in India increased 134.50 or 0.92% closed to 14,678.23.

Commodities, Metals, and Currencies

Crude oil increased $0.45 to close at $114.98 a barrel for a front month contract, natural gas closed up 13 cents to $8.10 per mBtu and gasoline futures increased 4.79 cents to close at 291.18 cents per gallon.

Gold increased $0.50 in New York trading to close at $817.30 per ounce, silver closed up $0.06 cents to $13.28 per ounce and copper for the front month delivery decreased 1.00 cent to $3.417 per pound.

Wheat futures closed up 29.25 cents in Chicago trading and closed at $8.99 a bushel. Sugar decreased 0.01 cent to 13.68 cents a pound. Soybean future closed up 24.00 cents to $13.00 a bushel.

Dollar edged higher and traded near record low against euro to $1.47478 and edged lower against yen to 109.78.

Yields on U.S. bonds decreased to 3.79% with 10 years of maturities and decreased to 4.44% with 30-year of maturities.