Oil Down 4.5%, Gas Drops 9%, Gold Falls 3.5%

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

U.S. stocks failed to follow on early gains after a 2-day drop in oil of 10%. Weak energy and commodities sector stocks dragged benchmark indexes lower. The commodities linked economies and stock markets in Canada, Brazil and UK fell sharply. Indian stocks rallied on a sustained drop in oil as expectations of lower inflation drove indexes higher. Most banks in China reported 50% or better earnings gain in the first half, but further earnings gains are likely to be modest.

4:00PM New York, 10:00PM Frankfurt, 6:00AM Sydney[R]– U.S. stocks closed lower after trading higher. Crude oil prices have lost nearly 10% in the last two sessions sparking a rally in Asian markets. Canada, UK and Brazil closed lower.[/R]

Global Markets Update

U.S. stocks edged more than 1% higher after a drop in crude oil price but closed lower. The oil prices fell more than 6% after dropping 4% yesterday and closed 4.5%. Other commodities prices dropped as well dragging stocks of oil and metals mining companies lower. Transportation stocks rose. UAL, AMR, Delta and railroad companies reached higher. Peabody Energy dropped 11%, U.S. Steel declined 10% and Massey Energy fell 9.8%, the three largest decliners in the S&P 500 index.

UK markets struggled to close higher and pound fell for the sixth day in a row against euro and dollar. A sharp drop in crude oil prices for the second day in a row with a total loss of 10% dragged stocks in the mining and energy sectors which dominate the benchmark FTSE 100 index. UK pound fell as investors worry that economy will remain in slump for the rest of the year. Ashtead Group, the equipment rental company surged 9% after it reported better than expected sales and earnings gains.

Stocks in Japan tracked losses in commodities prices and fell 1.75%. A two-day sharp fall in crude oil prices dragged oil prices down nearly 10%. Inpex Holdings led decliners in the Nikkei 225 index shares with a fall of 6.7% followed by losses in Toho Zinc of 6.2%, in Takashimaya of 6%, in Nippon Sheet Glass of 5.9%, and GS Yuasa Corp. of 5.2%. Japan is increasingly likely to head for a national election as voters demand a change and faster political actions.

Stocks in Hong Kong rose and in Shanghai fell as crude oil continued its slide for the second day in a row. Airlines and refineries rose and port operator China Merchants added 4.4%. China Merchants Holdings first half profit rose 42% to HK$2.02 billion and revenue rose 18% to HK$3.37 billion. The port operator with locations in Hong Kong and in China reported rising ocean traffic to Asia and to Europe. The company through several ventures control ports that handled 25.1 million containers.

Indian stocks rose sharply with a drop in crude oil prices for the second day in a row. Oil in two days fell 10% and traded as low as $108 a barrel. Further losses are expected in the oil prices and may test $100 level in the next three weeks. Stocks responded with sharp gains. Sensex and CNX Nifty added more than 3.5%. Banks and realty stocks surged with a decline in crude oil prices. Kotak Mahindra Bank rose 10%, State Bank of India gained 7.5% and Jet Airways increased 9.6%.

North American Markets

Dow Jones Industrial Average decreased 26.63 or 0.23% to a close of 11,516.92, S&P 500 Index closed down 5.27 or 0.41% to 1,277.56, and Nasdaq Composite Index decreased 18.28 or 0.77% to close at 2,349.24. In Toronto TSX Composite closed down 444.36 or 3.23% to 13,326.89.

Of the 30 stocks in Dow Jones Industrial Average 19 stocks gained, 11 declined and one was unchanged.

Alcoa led decliners in Dow Jones Industrial Average with a loss of 5.07% followed by losses in Chevron of 3.5%, in Exxon Mobil 3.3% and in IBM of 2.91%.

General Motors led gainers in Dow Jones Industrial Average with a rise of 5.9% followed by gains in Bank of America of 4.34%, in Home Depot Inc of 3.47%, in American Express of 2.04%, in Verizon Communications of 1.94% and in DuPont of 1.91%.

Of the stocks in S&P 500 index, 275 increased, 220 declined and 5 were unchanged. Of the index stocks, 46 rose more than 3% and 69 fell more than 3%.

Regions Financial led the gainers in the S&P 500 index with a rise of 19.20% followed by gains in Freddie Mac of 14.6%, in Zions Bancorp of 9.20%, in Fannie Mae of 7.89%, in Huntington Bancorp of 7.1% and in Convergys Corp of 6.92%.

Peabody Energy led decliners in the S&P 500 index with a loss of 11.64% followed by losses in U.S. Steel Corp of 10.26%, in Massey Energy of 9.75%, in CF Industries of 9.6%, in National Oilwell Varco of 9.3%, in AK Steel of 9.17% and in Fluor Corp of 8.70%.

South American Markets Indexes

Mexico gained in the region with a rise of 0.37% followed by increases in Venezuela of 0.25%.

Brazil led decliners in the region with a fall of 1.52% followed by decreases in Argentina of 1.17% in Colombia of 0.6%, in Chile of 0.16% and in Peru of 0.10%.

Europe Markets Review

In London FTSE 100 Index closed higher 17.90 or 0.32% to 5,620.70, in Paris CAC 40 Index increased 66.94 or 1.50% to close at 4,539.07 and in Frankfurt DAX index higher 96.67 or 1.51% to close at 6,518.47. In Zurich trading SMI increased 70.84 or 0.98% to close at 7,298.59.

Asian Markets Review

The Reserve Bank of Australia cut its interest rate by 25 basis points to 7%, a first rate reduction in the last seven years. Weakening economy, falling retail sales and declining business confidence may have contributed to the decision by the central bank. The economy of $1 trillion is tightly linked to the Chinese economy and the fears of Chinese economic slowdown after the Olympics Games have dragged the confidence in Australia.

The Nikkei 225 Index in Tokyo closed lower 224.71 or 1.75% to 12,609.47, Hang Seng index in Hong Kong increased 136.15 or 0.65% closed to 21,042.46.ASX 200 index in Australia decreased 2.30 or 0.04% to close 5,116.00. The KL Composite index in Malaysia decreased 13.51 or 1.23% closed to 1,086.99.

The Kospi Index in South Korea decreased 7.29 or 0.52% to close at 1,407.14, SET index in Thailand closed lower 12.21 or 1.81% to 675.22 and JSE Index in Indonesia decreased 5.57 or 0.26% to 2,159.05. The Sensex index in India increased 551.35 or 3.80% closed to 15,049.86.

Commodities, Metals, and Currencies

Crude oil decreased $5.23 to close at $110.23 a barrel for a front month contract, natural gas closed down 66 cent to $7.28 per mBtu and gasoline futures decreased 10.92 cents to close at 274.50 cents per gallon.

Gold decreased $25.20 in New York trading to close at $810.00 per ounce, silver closed down $0.55 cents to $13.15 per ounce and copper for the front month delivery decreased 11.00 cent to $3.27 per pound.

Wheat futures closed down 34.50 cents in Chicago trading and closed at $7.66 a bushel. Sugar decreased 0.05 cent to 12.71 cents a pound. Soybean future closed down 25.50 cents to $12.98 a bushel.

Dollar edged higher against euro to $1.4507 and edged higher against yen to 108.725.

Yields on U.S. bonds decreased to 3.73% with 10 years of maturities and decreased to 4.35% with 30-year of maturities.