U.S. Stocks Up, Alcoa Restructuring

123jump.com Staff
06 Jan, 2009
New York City

U.S. stocks rebounded on the hopes that the new administration will soon provide a large economic stimulus. Alcoa Inc laid off 13% of its staff and cut its capital expenditure and suspend stock buyback. Dow Chemical will seek $2.5 billion from Kuwait after it canceled joint venture.

[R]5:00PM New York – 11:00PM Frankfurt, 4:00AM Sydney – U.S. stocks edged higher on the expectations of large economic stabilization plan from the new administration.[/R]

U.S. stocks edged higher after the President-elect Obama and Democrat leaders appear to be ready with a plan for $775 billion economic stimulus package. The plan favors giving cash rebate of $500 per individual and other infrastructure projects that will create jobs. Alcoa Inc, the largest aluminum producer announced a plan to reduce capital expenditure, eliminate 13,500 jobs and suspend share buybacks.

Solar panel chip makers fell after LDK lowered its revenue estimate and Evergreen took one time charge on production stoppage and shipment delays. IntercontinentalExchange declined on earnings worries. Garmin Limited dropped after Goldman downgraded the stock.

UK house prices dropped 2.5% from a month earlier and 15.9% from a year ago to £153,048 in December. UK service sector shrank in December. The benchmark index FTSE 100 index rose 1.3%. Crude oil price edged higher on the rising tension in the Middle East.

Stocks in Japan edged higher on a rise in spot prices of computer chips and weakening yen. Toyota will lower production at 11 plants in the next two months. Prices of memory chips in Asian trading surged for the second day on expectations of lower than expected supply.

Hong Kong home sale in December rebound from a month ago but fall sharply for the year. Weak confidence, falling demand and tight lending from banks depress property sales.

Mumbai stocks traded mix ahead of earnings season and the expectations of more rate cuts. More rate cuts are likely in the next three months if the economy remains weak. Axis Bank and Infosys will kick start the earnings season at the end of this week.

Australian stocks rose 1.5% despite the latest read on business conditions showed a weakness last seen 10 years ago. Auto sales dropped 11.3% in December and fell 3.6% in the year 2008. Auto sales are expected to fall 12% in 2009 in Australia.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher37.72 or 0.42% to 9,080.84, Hang Seng index in Hong Kong decreased 53.80 or 0.35% closed to 15,509.51 CSI 300 index in China higher 59.84 or 3.18% closed to 1,942.80. ASX 200 index in Australia increased 55.70 or 1.51% to close 3,742.70. The KL Composite index in Malaysia higher 1.57 or 0.17% closed to 922.23.

The Kospi Index in South Korea increased 20.71 or 1.76% to close at 1,194.28. SET index in Thailand closed lower 5.54 or 1.16% to 473.15 and JSE Index in Indonesia decreased 1.80 or 0.13% to 1,435.54. The Sensex index in India increased 60.33 or 0.59% closed to 10,335.93.

Europe Markets Review

In London FTSE 100 Index closed higher 59.28 or 1.29% to 4,638.92, in Paris CAC 40 Index increased 36.30 or 1.08% to close at 3,396.22 and in Frankfurt DAX index higher 42.32 or 0.85% to close at 5,026.31. In Zurich trading SMI increased 43.22 or 0.75% to close at 5,799.31.

Commodities, Bonds and Currencies

Yields on 10-year bond declined to 2.45% and on 30-year bonds dropped to 2.99%.

The U.S. dollar declined to $1.36 to a euro and against the Japanese yen fell to 93.255 yen.

Immediate futures prices of Texas crude oil fell $0.42 to $48.39 a barrel, for natural gas increase 7.9 cents to $5.993 per mbtu and gasoline prices increased 0.57 cents to 118.81 cents a gallon.

Futures of corn increased 16.25 cent to $4.27, soybean increased 29 cents to $10.16, sugar increased 0.45 cents to 12.27 a pound and wheat rose 26.75 to $6.435 a bushel.

In metals trading, copper prices rose 12.10 cents to $1.58 per pound, gold increased $6.30 to $864.10 per ounce and silver increased 20 cents to $11.48.