Gustav Weakens; Oil, Pound Drops

123jump.com Staff
01 Sep, 2008
New York City

Crude oil futures fell after the slow moving storm Gustav in the Gulf of Mexico was estimated to cause less damage than feared. The British pound fell to a two-year low to below $1.80 after mortgage approvals fell and manufacturing index showed a contraction. India exports in July increased 31.2% from a year ago to $16.3 billion after increasing at 23.5% in June. Japan auto sales in August declined and are likely to fall for the year, Toyota and Nissan sales fell but Honda sales increased.

4:00PM New York, 10:00PM Frankfurt, 6:00AM Sydney[R]– Crude oil fell 4% after tropical storm weakened in the Gulf of Mexico but may cause more damage in Texas and Louisiana region in the next 48 hours.[/R]

Global Markets Update

Crude oil fell 4% after Hurricane Gustav was downgraded and is expected to cause substantially less damage then feared. The slow moving hurricane is expected to slow down further in the next two days and bring heavy rains today and tomorrow in region around New Orleans. The storm is likely to turn towards Eastern Texas by Tuesday according the forecast from the National Hurricane Center in Miami, Florida.

The British pound fell to a two-year low to below $1.80 after mortgage approvals fell and manufacturing index showed a contraction. Base metals and precious metals prices fell in London. Crude oil prices dropped as impending tropical storm in the Gulf of Mexico weakened. Headlam Group declined 14% after it reported profit decline of 3.9%. Kenmare Resources, the titanium miner in Mozambique fell 10% after its sold $30 million in an offering.

India exports in July increased 31.2% from a year ago to $16.34 billion after increasing at 23.5% in June. Imports rose 48.1% to $27.14 billion, yielding a trade deficit of $10.8 billion. The monthly trade deficit has been hovering around $10 billion and is expected to top $120 billion for the current fiscal year. Rising crude oil prices in the month contributed to 70% of the imports. Separately, monthly unit sales of Maruti Suzuki fell 9% in August from a year ago to 59,908.

Japan auto sales in August declined and are likely to fall for the year. Toyota, Honda and Nissan fell between 2% and 3% in trading. A day ago, Yasuo Fukuda, the prime minister of Japan resigned after months of trying to cobble a consensus on economic policies and political agenda that will lower government spending. Taro Aso is likely to lead LDP party election and may be voted as a replacement.

Hong Kong stocks fell led by technology companies after personal computer maker Dell fiscal second quarter profit slumped 17%. Aluminum Corporation of China Limited, the largest producer of aluminum said first-half revenues dropped 64.08% to Rmb3.5 billion. Net profit in the quarter declined 65.56% to Rmb2.4 billion or Rmb18 per share.

North American Markets

Markets in Canada and the U.S. were closed today.

South American Markets Indexes

Colombia led the gainers in the region with a surge of 3.6% followed by increases in Mexico of 0.5%, in Argentina of 0.09% and Peru of 0.13%.

Brazil led decliners in the region with a fall of 0.93% followed by decreases in Chile of 0.77% and in Venezuela of 0.04%.

Europe Markets Review

In London FTSE 100 Index closed lower 33.80 or 0.60% to 5,602.80, in Paris CAC 40 Index decreased 10.47 or 0.23% to close at 4,472.13 and in Frankfurt DAX index lower 0.50 or 0.01% to close at 6,421.80. In Zurich trading SMI decreased 10.99 or 0.15% to close at 7,227.75.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 238.69 or 1.83% to 12,834.18, Hang Seng index in Hong Kong decreased 355.58 or 1.67% closed to 20,906.31.ASX 200 index in Australia decreased 17.30 or 0.34% to close 5,118.30. Market of Malaysia was closed today.

The Kospi Index in South Korea decreased 59.81 or 4.06% to close at 1,414.43, SET index in Thailand closed lower 9.22 or 1.35% to 675.22 and JSE Index in Indonesia decreased 1.32 or 0.06% to 2,164.62. The Sensex index in India decreased 66.02 or 0.45% closed to 14,498.51.

Commodities, Metals, and Currencies

Crude oil decreased $4.32 to close at $111.14 a barrel for a front month contract, natural gas closed down 42 cent to $7.52 per mBtu and gasoline futures decreased 10.62 cents to close at 274.80 cents per gallon.

Gold decreased $13.20 in New York trading to close at $822.20 per ounce, silver closed down $0.18 cents to $13.52 per ounce and copper for the front month delivery decreased 8.00 cent to $3.30 per pound.

In Friday’s trading, wheat futures closed down 12.00 cents in Chicago trading and closed at $7.99 a bushel. Sugar decreased 0.46 cent to 12.77 cents a pound. Soybean future closed up 1.00 cents to $13.25 a bushel.

Dollar edged higher and traded near record low against euro to $1.4602 and edged lower against yen to 108.805.

In Friday’s trading yields on U.S. bonds increased to 3.81% with 10 years of maturities and decreased to 4.42% with 30-year of maturities.