Fed On Hold, Flu Alert Raised

123jump.com Staff
29 Apr, 2009
New York City

Stocks in New York surged after the Fed left it key lending rate range unchanged and forecasted that rates are likely to remain low for extended period of time. The WHO raised its flu alert to the highest level. Bank of America shareholders are deciding the fate of its board and chief executive.

[R]4:00PM New York, 10:00PM Frankfurt – Stocks in New York surged after the Fed left it key lending rate range unchanged and forecasted that rates are likely to remain low for extended period of time. The WHO raised its flu alert to the highest level. Bank of America shareholders are voting to decide the fate of its board and its chief executive.[/R]

Stocks in New York surged after the Fed kept its target rate unchanged and focused on providing liquidity to financial markets and borrowers directly.

Fed kept its target rate between zero and 0.25% and indicated that it expects rates to remain low for “extended period.” The economic contraction has slowed in the recent months according to the Fed statement but conditions are expected to remain weak for extended period of time.

The Fed appears to be worried about the deflation and not inflation. In the statement Fed noted, “In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.”

Fed is engaged in the largest expansion of its balance sheet in the last fifty years and is committed to purchase $300 billion of Treasury bonds and $1.25 trillion of agency mortgage backed securities. As of yesterday, the Fed has purchased $74 billion of Treasury securities and $381 billion of mortgage backed securities.

The Bank of America shareholders are expected to vote in favor of Ken Lewis top job at the bank but his authority may be severely limited in the future. Shareholders revolt may separate the chairman and chief executive role and weaken his position in dealing with the Treasury. The results of vote were not clear as late this afternoon.

World Health Organization raised its alert for swine flu to the phase 5 from phase 4 and said that pandemic cannot be avoided. Markets in Brazil and Mexico gained on the back of a rally in New York.

The embattled automaker Chrysler LLC and Treasury are in the last minute talks to avoid bankruptcy filing. President Obama is expected to issue statement as early as tomorrow according to several media reports.

European stocks closed higher lifted by a rise in banks and cyclical companies. Siemens earnings lifted German stocks and BNP Paribas and Michelin supported a rise in Paris benchmark index. SAP fell after it reported a drop in earnings. ArcelorMittal led decliners in Paris.

UK stocks surged after banks and miners rallied. Revised expectations of lower losses at Royal Bank of Scotland lifted banks. Higher prices of copper and other base metals lifted miners. Punch Tavern surged 39% on adequate capital till 2010.

Stocks in Mumbai trading surged ahead of derivatives expiration. In volatile trading market indexes traded up despite election jitters and positive earnings from Bharti Airtel, Sterlite Industries and Patni Computer. ICICI Bank led the gainers in banking sector with a surge of 9%.

North American Markets

Dow Jones Industrial Average increased 168.78 or 2.11% to a close of 8,185.73, S&P 500 Index gained 18.48 or 2.16% to 873.64, and Nasdaq Composite Index added 38.13 or 2.3% to close at 1,711.94.

Of the stocks in S&P 500 index, 425 increased, 73 declined and 2 were unchanged.

E*Trade Financial led decliners in the S&P 500 index with a loss of 33% followed by losses in VF Corp of 13.6%, in Total System Services of 11.5%, in Aetna Inc of 10.3%, in Stericycle Inc of 5.6% and in Nike Inc of 4.7%.

Wyndham Worldwide led gainers in the S&P 500 index with a surge of 35.4% followed by gains in Massey Energy of 23.6%, in Lincoln National Corp of 15.8%, in Meredith Corp of 15.6%, in Life Technologies of 15.1% and in Time Warner of 14.2%.

South American Markets Indexes

Mexico Bolsa Index increased 416.81 or 1.92% to 22,079.34. Brazil Bovespa Stock Index surged 1,405.35 or 3.1% to 47,266.79.

Argentina Merval Index increased 2.2%, Chile Stock Market Select index increased 1.6% and Peru Lima General Index added 2.1%. Colombia IGBC General Index edged up 1.5% and Venezuela Stock Market Index edged lower 0.6%.

Asian Markets Review

The Hang Seng index in Hong Kong increased 401.84 or 2.76% closed to 14,956.95, CSI 300 index in China higher 86.84 or 3.45%closed to 2,605.37. ASX 200 index in Australia decreased 13.10 or 0.35% closed to 3,695.30. The KL Composite index in Malaysia higher 1.76 or 0.18% closed to 967.46.The Markets of Tokyo were closed today.

The Kospi Index in South Korea increased 38.18 or 2.94% to close at 1,338.42. SET index in Thailand closed higher 10.78 or 2.28% to 483.50 and JSE Index in Indonesia increased 48.27 or 3.02% closed to 1,644.18. The Sensex index in India increased 401.50 or 3.65% closed to 11,403.25.

Europe Markets Review

In London FTSE 100 Index closed higher 93.19 or 2.27% to 4,189.59, in Paris CAC 40 Index increased 65.92 or 2.16% to close at 3,116.94 and in Frankfurt DAX index higher 97.14 or 2.11% to close at 4,704.56. In Zurich trading SMI increased 43.63 or 0.85% to close at 5,152.72.

Commodities, Metals, and Currencies

Crude oil increased $0.97 to close at $50.89 a barrel for a front month contract, natural gas decreased 9 cent to $3.35 per mBtu and gasoline futures increased 4.68 cents to close at 144.45 cents per gallon.

Wheat futures closed up 10.00 cents in Chicago trading and closed at $5.32 a bushel. Sugar increased 0.04 cent in trading at 14.08 cents a pound. Soybean future closed up 42 cent to $10.25 a bushel.

Gold increased $6.40 in New York trading to close at $900.00 per ounce, silver closed up $0.32 to $12.75 per ounce and copper for the front month delivery increased 10.10 cents to $2.0175 per pound.

Dollar edged lower against euro to $1.3270 and closed down against yen to 97.67.

Yields on 10-year U.S. bonds increased to 3.11% and with 30-year maturities closed up at 4.03%.