Metals, Agriculture, Oil Rally

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

Commodities and crude oil futures rose sharply lifting resource stocks for the second day in a row. The dollar hovered near its recent lows. Cocoa prices surged after demand supply gap was doubled from the previous estimate. Base and precious metal prices closed up as demand from China rises after the completion Olympic Games. Crude oil futures jumped more than 5%.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– Crude oil and base metal prices surge as the U.S. dollar loses its momentum. Cocoa surged the most in four years on twice the earlier expected gap between demand and supply. Crude oil, base metal and agriculture commodities rebound for the week.[/R]

Global Markets Update

Credit market worries continue to drive negative sentiment in world markets. Asian markets closed sharply lower on the worries of falling exports and talks of rising credit defaults. Rising inflation also dragged emerging markets in Asia and in Europe lower. European markets edged lower despite a sharp reversal in crude oil prices. U.S. market indexes fell as investors speculate on Freddie Mac, Fannie Mae and Lehman Brothers. Gold rebounded. Initial jobless claims fell 13,000 to 432,000 at the end of last week. UK retail sales rise and inflation in India reaches at 16-year high.

Global credit markets weakness spread by the regulatory failures in the U.S. financial system continue to hobble investors in Japan and in Asia. Stocks in Tokyo fell. Japan trade surplus in July dropped 87% to 91 billion yen as imports rise faster than exports on rising crude oil prices. Exports to China and Asia continue to rise and but exports to the U.S. declined for the eleventh month in a row.

Hong Kong stock indexes fell on the comments made by chairman of Hutchinson Whampoa Li Ka Shing that it was unrealistic to expect the government to rescue the market. The Hong Kong billionaire and widely respected investor observed that in these difficult times it will not be prudent to pursue acquisitions. Rising crude oil prices also put renewed pressure on stocks and benchmark indexes in Hong Kong dropped 2.6% and in Shanghai fell 3.5%.

Wholesale inflation index, measured on a rolling weekly basis for the annual period surged to 12.63% at the end of first week in August. Sustain rise in crude oil and food prices contributed to the increase in index. Economists expect the inflation index to rise to 14% by the end of the year before cooling off to 9% or lower. The inflation news dragged stocks sharply lower on the worries that monetary policy may be tightened more to curb the rising demand.

North American Markets indexes

Dow Jones Industrial Average increased 12.78 or 0.11% to a close of 11,430.21, S&P 500 Index closed up 3.18 or 0.25% to 1,274.55, and Nasdaq Composite Index decreased 8.70 or 0.36% to close at 2,380.38. In Toronto TSX Composite closed up 189.08 or 1.42% to 13,539.22.

Of the 30 stocks in Dow Jones Industrial Average 17 stocks gained, 13 declined and none was unchanged.

AIG led decliners in Dow Jones Industrial Average with a loss of 4.33% followed by losses in General Motors of 2.34%, in Intel Corp of 1.67%, in Coca-Cola Company 1.57%, in JP Morgan Chase of 1.30% and in United Technologies of 1.00%.

Chevron led gainers in the Dow Jones Industrial Average with a rise of 2.73% followed by increase in Exxon Mobil of 2.31% and Home Depot Inc of 2.3% and in Alcoa Inc of 1.40%.

Of the stocks in S&P 500 index, 248 increased, 240 declined and 12 were unchanged. Of the index stocks, 23 rose more than 3% and 18 fell more than 3%.

Limited Brands led the gainers in the S&P 500 index with a rise of 13.3% followed by gains in Fannie Mae of 10.7%, in Centex Corp of 7.8%, in Massey Energy of 6.6%, in Peabody Energy of 5.8% and in Lennar Corp of 5.70%.

JDS Uniphase led decliners in the S&P 500 index with a loss of 12% followed by losses in MBIA Inc of 8%, in Supervalu Inc of 6.3%, in Tesoro Corp of 5.9%, in Sovereign Bancorp of 5.80%, in Wamu Inc of 4.6% and in AIG of 4.5%.

South American Markets Indexes

Peru led gainers in the Latin American markets with a rise of 3.06% followed by increases in Brazil of 1.01%, in Colombia of 0.77%, in Chile of 0.5% and in Argentina of 0.34%.

Mexico declined 1.23% and Venezuela dropped 0.12%.

Europe Markets Review

In London FTSE 100 Index closed lower 1.60 or 0.03% to 5,370.20, in Paris CAC 40 Index decreased 61.26 or 1.40% to close at 4,304.61 and in Frankfurt DAX index lower 80.84 or 1.28% to close at 6,236.96. In Zurich trading SMI decreased 99.48 or 1.40% to close at 7,000.53.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 99.48 or 0.77% to 12,752.21, Hang Seng index in Hong Kong decreased 539.20 or 2.58% closed to 20,392.06. ASX 200 index in Australia decreased 54.30 or 1.10% to close 4,875.20. The KL Composite index in Malaysia decreased 1.78 or 0.17% closed to 1,071.43.

The Kospi Index in South Korea decreased 28.12 or 1.83% to close at 1,512.59, SET index in Thailand closed lower 13.52 or 1.96% to 676.53 and JSE Index in Indonesia increased 18.55 or 0.90% to 2,088.25. The Sensex index in India decreased 434.50 or 2.96% closed to 14,243.73.

Commodities, Metals, and Currencies

Crude oil increased $5.84 to close at $121.40 a barrel for a front month contract, natural gas closed up 20 cents to $8.27 per mBtu and gasoline futures increased 13.49 cents to close at 304.52 cents per gallon.

Gold increased $23.40 in New York trading to close at $839.70 per ounce, silver closed up $0.77 cents to $13.92 per ounce and copper for the front month delivery increased 14.05 cent to $3.53 per pound.

Wheat futures closed up 22.75 cents in Chicago trading and closed at $9.22 a bushel. Sugar decreased 0.46 cent to 14.14 cents a pound. Soybean future closed up 48.00 cents to $13.48 a bushel. International Cocoa Organization doubled its global deficit between supply and demand to 88,000 from its earlier estimate of 41,000 at the end of twelve months in September of this year.

Dollar edged lower and traded near record low against euro to $1.4858 and edged lower against yen to 108.52.

Yields on U.S. bonds increased to 3.83% with 10 years of maturities and increased to 4.47% with 30-year of maturities.