Gold, Oil Surge, Fed Action Worries

123jump.com Staff
19 Mar, 2009
New York City

U.S. stocks declined as global investors voice skepticism about the Fed plan to purchase the U.S. government debt and pump cash in financial system. European banks closed higher and resource stocks surged in UK. Precious metals and energy prices soared on the worries of rising inflation.

5:30PM New York, 11:30PM Frankfurt, 8:30AM Sydney[R]– U.S. stocks declined as global investors voice skepticism about the U.S. Fed plan to buy government debt and pump cash in financial system. European banks closed higher and resource stocks surged in UK. Precious metals and energy soared on the worries of rising inflation.[/R]

Global Markets

U.S. government and Fed send mixed signals as global investors look for clues to the end of the ongoing financial crisis. Fed in its latest statement indicated that the central bank is prepared to purchase Treasuries for the first time since World War II and will authorize U.S. Treasury to print money to the tune of whopping $1.25 trillion.

Global investors are increasingly concerned about the U.S. policy of issuing more and more debt to fund government spending and Fed directive to issue additional credit to purchase illiquid mortgage securities.

Tech stocks rallied after Oracle reported better than expected earnings. However, insurance stocks fell sharply today after rating agency Moody’s downgraded debt of Prudential Financial.

U.S. auto parts maker closed sharply higher after the Treasury Secretary issued $5 billion in aid. Lear Corp and American Axle & Manufacturing are some of the largest parts maker facing severe financial crunch. General Motors and Chrysler are looking for $21.6 billion in additional government funds to the $18 billion received so far.

European markets closed higher led by a rise in banks in Germany and France and gains in insurance and resource stocks in U.K. UBS surged 4.6% after the troubles bank proposed to buy back 1 billion euros of debt and may raise capital to meet its regulatory capital needs. Barclays and Lloyds Banking Group surged more than 14%.

Resource stocks in UK rose after copper, gold and oil gained. Xstrata, BHP Billiton, Rio Tinto and Randgold Resources jumped more than 12%.

Insurance stocks in London trading gained. Aviva added 11%, Legal & General Group surged 22% and Prudential increased 13%.

In Tokyo trading stocks declined 0.3% after dollar declined against yen and commodities gained in the regional trading. U.S. Fed plan to purchase $1 trillion of mortgage bonds and U.S. government debt and authorizing the U.S. Treasury to print more money cautioned investors in Japan.

Casio Computer dropped 14% or 100 yen its daily trading limit after the company estimated annual loss in the current fiscal year. The loss will be the first in seven years as exports decline to the U.S. and Europe.

Mitsui Mining & Smelting declined 4% after the company eliminated its dividend and estimated annual loss of 72 billion yen.

In Shanghai trading stocks closed higher led by miners and energy related stocks. Zijin Mining Group Company gained 5% and Zhongjin Gold Company rose 6%. A sharp rise in gold and copper prices lifted stocks of other miners.

China Mobile reported slowest growth in net income with sales topping $60 billion.

Inflation measure in India suggested weak inflation. Wholesale inflation index for the twelve months ending on March 7 declined to 0.44% from 2.43% at the end of the previous week. The measure of wholesale and consumer price indexes are expected to fall as recent tax cuts and fall in energy prices are factored in.

North American Markets

Dow Jones Industrial Average declined 85.8 or 1.2% to a close of 7,400.80, S&P 500 Index decreased 10.31 or 1.3% to 784.04, and Nasdaq Composite Index declined 7.74 or 0.5% to close at 1,483.48.

Of the stocks in S&P 500 index, 181 increased, 315 declined and 4 were unchanged.

Prudential Financial, Inc led the decliners in the S&P 500 index with a loss of 21.4% followed by losses in Developers Diversified Realty Corporation with a loss of 16%, in Lincoln National Corporation of 14.6%, in Regions Financial of 12.7%, in Capital One Financial of 11.7% and in Citigroup Inc of 11.7%.

Aloca Inc led gainers in the S&P 500 index with a rise of 18% followed by gains in Massey Energy of 14%, in AIG of 14%, in Office Depot Inc of 12.2% and in Nabor Industries Ltd of 11.1%. Johnson Controls and Oracle Corp added more than 10%.

South American Markets Indexes

Mexico Bolsa Index decreased 23.97 or 0.12% to 19,596.51. Brazil Bovespa Stock Index gained 350.72 or 0.87% to 40,493.01.

Argentina gained 1.2%, Chile decreased 0.3%, Peru surged 3.7% and Colombia increased 1.1%.

Europe Markets Review

In London FTSE 100 Index closed higher 11.94 or 0.31% to 3,816.93, in Paris CAC 40 Index increased 16.65 or 0.60% to close at 2,776.99 and in Frankfurt DAX index higher 47.14 or 1.18% to close at 4,043.46. In Zurich trading SMI increased 11.31 or 0.24% to close at 4,794.63.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 26.21 or 0.33% to 7,945.96, Hang Seng index in Hong Kong increased 13.75 or 0.10% closed to 13,130.92, CSI 300 index in China higher 49.91 or 2.14% closed to 2,382.56. ASX 200 index in Australia increased 33.90 or 0.98% closed to 3,480.20. The KL Composite index in Malaysia higher 4.22 or 0.50% closed to 852.18.

The Kospi Index in South Korea decreased 8.14 or 0.70% to close at 1,161.81. SET index in Thailand closed higher 1.52 or 0.36% to 427.72 and JSE Index in Indonesia increased 18.77 or 1.42% closed to 1,341.60. The Sensex index in India increased 25.07 or 0.28% closed to 9,001.75.

Commodities, Metals, and Currencies

Crude oil increased $3.16 to close at $51.30 a barrel for a front month contract, natural gas increased 52 cents to $4.20 per mBtu and gasoline futures increased 7.43 cents to close at 135.83 cents per gallon.

Wheat futures closed up 25.250 cents in Chicago trading and closed at $5.55 a bushel. Sugar increased 0.38 cents in trading at 13.62 cents a pound. Soybean future closed up 25.50 cent to $9.405 a bushel.

Gold increased $72.80 in New York trading to close at $961.90 per ounce, silver closed up $1.68 to $13.62 per ounce and copper for the front month delivery increased 9.9 cents to $1.81 per pound.

Dollar edged lower against euro to $1.3652 and fell against yen to 94.56.

Yields on 10-year U.S. bonds increased to 2.59% and with 30-year maturities increased to 3.62%.