Weak Industrial Production; Builders Plunge

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

U.S. stocks fell after weak industrial production data in November. Home buidlers dropped sharply after a rating agency lowered debt ratings of nine companies. Business conditions in Japan decline the most in 34 years. Chinese industrial production rises at the slowest pace in seven years.

4:30PM New York, 10:30PM Frankfurt, 7:30AM Sydney[R]– U.S. stocks fell on weak industrial production data. UK home prices fell. Business conditions in Japan decline the most in 34 years. China’s industrial production rises at the slowest pace in seven years.[/R]

Global Markets

The U.S. industrial production declined 0.6% in November and dropped 5.5% from a year ago level. September month drop was revised downwards and October month index was revised up. The declines in November were widespread. More banks and hedge funds declare investment linked to the alleged Ponzi scheme operated by Bernard Madoff. BNP Paribas, Nomura Holdings and HSBC have declared investments linked to Madoff.

Home builders fell after Fitch rating agency dropped its rating on nine companies in construction sector. Lennar, DR Horton, Centex plunged on non-investment grade rating.

UK home prices dropped in December and are likely to fall further in the next year, according to a private survey conducted by Rightmove. The survey estimates rising distressed sales in the next twelve months. In trading, stocks edge higher on a rebound in metal and oil futures.

Japan business conditions decline in the latest three months ending in December. The sharp decline in 34 years is likely to hit the hardest small and medium size businesses and exporters. However, yen rose against the dollar and stock indexes surged on the U.S. auto bailout prospects.

Chinese industrial production in November rises at the slowest pace in seven years. The sharp fall in global economies has dragged exports and domestic economy. Stocks in Hong Kong and Shanghai rose after China indicated that 3G telecom licenses will issued by the end of the year.

Stocks in Mumbai rose on the expectations of another round of economic stimulus. Weak financial markets dragged merchant banking fees by 36% in the first eleven months of the year. Shipping industry stocks rose on the expectations of interest rate subsidy from the government.

Stocks in Sydney gained on the expectations that U.S. auto industry bailout will spur exports of raw materials. However, Australian government agency cut its forecast of commodities exports forecast by 10% to A$192 billion. One Australian dollar fetched 66.48 U.S. cents.

North American Markets

Dow Jones Industrial Average gained 65.15 or 0.8% to a close of 8,564.53, S&P 500 Index decreased 11.15 or 1.3% to 868.58, and Nasdaq Composite Index declined 32.38 or 2.10% to close at 1,508.34. In Toronto, TSX Composite Index dropped 56.43 or 0.7% to 8,459.02.

Of the stocks in Dow Jones Industrial Average 10 increased and 20 declined and none was unchanged.

General Motors led gainers in the Dow with a rise of 3.6% followed by increase in United Tech Corp of 1.7%, in Johnson & Johnson of 1%, in Coca Cola of 0.9% and in Procter & Gamble of 0.7%.

JP Morgan Chase led decliners in the Dow with a fall of 7.5% followed by decrease in Bank of America of 5.5%, in American Express of 4.9%, in Citigroup Inc of 3.9% and in AT&T Inc 3.7%.

Of the stocks in S&P 500 index, 101 increased, 399 decreased and none were unchanged. Of the index stocks, 166 fell more than 3%, 15 closed above 3% and 7 fell more than 10%.

Developers Diversified led decliners in the S&P 500 index with a fall of 17.4% followed by losses in Qwest Communication of 11.8%, in CB Richard Ellis of 11.7%, in Sears Holdings of 11.3%, in Tenet Healthcare of 10.2% and in Lincoln National of 10%.

Genworth Financial Services led gainers in the S&P 500 index with a surge of 12% followed by increases in Aetna of 11%, in XL Capital Ltd of 8.2%, in Ciena Corp of 8% and in Honeywell International of 6.3%.

South American Markets Indexes

Brazil led decliners in South American region with a loss of 2.7% followed by declines in Mexico of 1.7%, in Peru of 1.00% and in Chile of 0.9%.

Argentina led gainers in the region with a rise of 1.5% followed by increase in Colombia of 1.1% and in Venezuela of 0.4%.

Europe Markets Review

In London FTSE 100 Index closed lower 2.79 or 0.07% to 4,277.56, in Paris CAC 40 Index decreased 27.94 or 0.87% to close at 3,185.66 and in Frankfurt DAX index lower 8.55 or 0.18% to close at 4,654.82. In Zurich trading SMI decreased 109.63 or 1.95% to close at 5,526.54.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 428.79 or 5.21% to 8,664.66, Hang Seng index in Hong Kong decreased 288.56 or 1.96% closed to 15,046.95 CSI 300 index in China higher 14.65 or 0.75% closed to 1,975.03. ASX 200 index in Australia increased 81.00 or 2.31% to close 3,591.40. The KL Composite index in Malaysia lower 5.80 or 0.68% closed to 846.47.

The Kospi Index in South Korea increased 54.37 or 4.93% to close at 1,158.19. SET index in Thailand closed higher 12.27 or 2.89% to 437.06 and JSE Index in Indonesia increased 96.31 or 7.63% to 1,359.28. The Sensex index in India increased 142.32 or 1.47% closed to 9,832.39.

Commodities, Metals, and Currencies

Crude oil decreased $1.78 to close at $44.50 a barrel for a front month contract, natural gas increased 18 cents to $5.67 per mBtu and gasoline futures decreased 4.27 cents to close at 103.50 cents per gallon.

Wheat futures closed up 4.75 cents in Chicago trading and closed at $5.43 a bushel. Sugar decreased 0.12 cent to 11.52 cents a pound. Soybean future closed down 6.75 cent to $8.49 a bushel.

Gold increased $16.80 in New York trading to close at $837.30 per ounce, silver closed up 36 cent to $10.59 per ounce and copper for the front month delivery decreased 3.75 cents to $1.39 per pound.

Dollar edged lower against euro to $1.3701 and fell against yen to 90.76.

Yields on 10-year U.S. bonds decreased to 2.51% and with 30-year maturities increased to 2.97%.