U.S. Banks Rally; Brazil, India, China Surge

123jump.com Staff
04 May, 2009
New York City

U.S. stocks surged as world markets rallied on optimism that the rise in Chinese manufacturing index may indicate world trade stabilization. Pending contracts for home resale also increased in the U.S. lifting indexes and financials. Banks surged led by a rally in Wells Fargo.

[R]4:00PM New York, 10:00PM Frankfurt – U.S. stocks surged as world markets rallied on optimism that the rise in Chinese manufacturing index may indicate world trade stabilization. Pending contracts for home resale also increased in the U.S. lifting indexes and financials. Banks surged led by a rally in Wells Fargo.[/R]

U.S. stocks surged on second monthly increase in pending home resale contracts and gain in construction spending. With the rising indexes in the last four weeks has brought more liquidity to the market and investors are willing to pay higher multiple for earnings. The appetite for risks appears to be increasing with the rising indexes.

Markets in Brazil, Mexico, China, India and Australia soared and European markets closed higher. Crude oil and copper gained. Brazil closed above 50,000 for the first time in seven months.

Home builders, miners and banks rallied. Wells Fargo ((WFC)), Regions Financial ((RF)) and KeyCorp ((KEY)) surged more than 19%. Lennar, Pulte Home and KB Homes gained. Freeport McMoran, BHP Billiton, Rio Tinto and Vale participated in the rally.

Stocks rallied in New York after banks surged on the optimism in the banking sector. Warren Buffett commented at the annual general meeting of Berkshire Hathaway that loss at Citigroup has distorted public’s perception of banks. His asserted that Berkshire will like to buy the bank if regulators permitted. Berkshire owns 10% of Wells Fargo and stakes in U.S. Bancorp and M&T Bank.

European stocks closed higher led by a rise in steel and automakers, insurance companies and airlines. The worldwide rally was sparked by the latest read on manufacturing industry suggested expansion in manufacturing in China. ArcelorMittal and ThyssenKrupp surged.

China region stocks surged after investors piled in stocks on better than expected manufacturing industry data. The weekend agreement among Asian nations to set up a reserve fund also bolstered stocks in the region. Commodities linked stocks rallied in Hong Kong and in Shanghai.

Mumbai stocks surged on the optimism about recovery in the global markets and expanding manufacturing in China. HDFC reported 20% increase in profit and Allahabad Bank net income increased 55%. Century Textiles net increase 10%. Banks, financial services and commodities linked stocks surged.

Stocks in Australia surged, despite a record fall in home prices in the first quarter ending in March. Jobs ads in newspapers and on the Internet dropped 7.5% in April and plunged nearly half from a year ago. Macquarie Group sold 20 million shares at A$27.00 a share and raised A$540 million.

North American Markets

Dow Jones Industrial Average increased 214.33 or 2.61% to a close of 8,426.74, S&P 500 Index added 29.71 or 3.4% to 907.23, and Nasdaq Composite Index increased 44.36 or 2.6% to close at 1,763.56. In Toronto TSX Composite Index increased 365.66 or 3.85% to 9,862.62.

Of the stocks in S&P 500 index, 447 increased, 50 declined and 3 were unchanged.

Sysco Corp led decliners in the S&P 500 index with a loss of 3.8% followed by losses in Washington Post of 3.7%, in Interpublic Group of 3.2%, in American Tower of 3.2%, in Adobe Systems Inc of 2.8% and in Direct TV Group Inc of 2.6%.

Regions Financial led gainers in the S&P 500 index with a surge of 26% followed by gains in Fifth Third Bancorp of 25.5%, in Wells Fargo & Company of 23.7%, in Marshall & Ilsley of 21.7%, in Massey Energy of 21.1% and in KeyCorp of 19.4%.

South American Markets Indexes

Markets in Mexico surged after President Calderon suggested that swine flu epidemic is ebbing and patients are responding well to medications.

The Brazilian stocks surged above 50,000 for the first time since September 2008 on the hopes that recovery in international trade led by China and India will increase exports of iron ore.

Mexico Bolsa Index increased 1,115.20 or 5.1% to 23,014.05. Brazil Bovespa Stock Index gained 2,948.14 or 6.23% to 50,237.67.

Argentina Merval Index surged 6.1%, Chile Stock Market Select index increased 3.1% and Peru Lima General Index added 2.4%. Colombia IGBC General Index edged up 1.7% and Venezuela Stock Market Index edged lower 0.01%.

Europe Markets Review

In Paris CAC 40 Index increased 78.12 or 2.47% to close at 3,237.97 and in Frankfurt DAX index higher 133.00 or 2.79% to close at 4,902.45. In Zurich trading SMI increased 92.42 or 1.77% to close at 5,318.34. Markets of London were closed today.

Asian Markets Review

The Hang Seng index in Hong Kong increased 860.06 or 5.54% closed to 16,381.05, CSI 300 index in China higher 91.38 or 3.48% closed to 2,714.30. ASX 200 index in Australia increased 113.40 or 3.01% closed to 3,883.00. The KL Composite index in Malaysia higher 18.62 or 1.88% closed to 1,009.36.The Markets of Tokyo were closed today.

The Kospi Index in South Korea increased 28.56 or 2.09% to close at 1,397.92. SET index in Thailand closed higher 14.57 or 2.96% to 506.26 and JSE Index in Indonesia increased 58.56 or 3.39% closed to 1,788.15. The Sensex index in India increased 731.50 or 6.41% closed to 12,134.75.

Commodities, Metals, and Currencies

Crude oil increased $1.18 to close at $54.38 a barrel for a front month contract, natural gas increased 17 cent to $3.71 per mBtu and gasoline futures increased 7.00 cents to close at 158.74 cents per gallon.

Wheat futures closed down 19.00 cents in Chicago trading and closed at $5.51 a bushel. Sugar decreased 0.03 cent in trading at 15.02 cents a pound. Soybean future closed up 12.50 cent to $11.03 a bushel.

Gold increased $12.40 in New York trading to close at $900.60 per ounce, silver closed up $0.49 to $12.99 per ounce and copper for the front month delivery increased 4.50 cents to $2.14 per pound.

Dollar edged lower against euro to $1.3404 and closed up against yen to 99.93.

Yields on 10-year U.S. bonds increased to 3.15% and with 30-year maturities closed up at 4.06%.