Bank Rally Lifts U.S. Indexes; Oil, Copper Rise

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

Stocks in New York surged on a rally in financials and talks of banks returning TARP funds. Treasuries fell as yields on 30-year bonds rose to 4.21%. Stocks in India soared 17% in one minute of trading, ahead of trading halts after the ruling coalition widened its margin of election win.

[R]5:00 PM New York, 10:00 PM London, 8:00AM Sydney – Stocks in New York surged on a rally in financials and talks of banks returning TARP funds. Treasuries fell as yields on 30-year bonds rose to 4.21%. Stocks in India soared 17% in one minute of trading, ahead of trading halts after the ruling coalition widened its margin of election win.[/R]

U.S. investors’ appetite for risk appear to have been growing with more rating upward revisions, banks rallying and expectations of bottoming out of the economy. Of course, most of these moves are based on expectations of future earnings. Treasuries fell and oil and metals gained.

Janus Group surged 18% and led the gainers in the S&P 500 on the hopes that mutual funds flows have turned positive since April. The rally in financials also lifted stocks of banks, insurance companies and brokers.

Morgan Stanley, Goldman Sachs and JP Morgan Chase are looking to repay TARP funds to the Treasury awaiting the Fed approval. The media speculation drove the stocks of three between 6% and 8%.

Bank of America surged 10% after Citigroup analyst Citigroup suggested that the bank may have raised $4 billion by selling its common stock.

Stocks in London rallied on the back of financial stocks. Lloyds chairman resigned ahead of its annual meeting and launched £4 billion rights offering. Thomas Cook surged 6% after the rival Kuoni in Switzerland is seeking to acquire companies.

Stocks in Colombo surged after the army declared victory over LTTE rebel and also confirmed the death of its leadership including Prabhakaran. Pottu Amman, the chief of intelligence and behind the killing of former Indian Prime Minister Rajiv Gandhi was found dead in a battle with the army.

In Tokyo, strong yen and weak operating results from Panasonic and Yokogawa Electric dragged the benchmark index Nikkei 225 lower 2.5%. Yokogawa led the decliners in Nikkei 225 index with a loss of 15%. Suzuki Motors and Kansai Paint gained after the reelection of ruling coalition in India where they lead markets.

Stocks in Australia declined tracking losses in metal prices. Billabong International lowers earnings outlook and proposed offering to raise A$290 million. Gloucester Coal surged after it agreed to a higher offer from Noble Group.

North American Markets

Dow Jones Industrial Average increased 235.44 or 2.9% to a close of 8,504.08, S&P 500 Index surged 26.83 or 3% to 909.71, and Nasdaq Composite Index edged higher 52.22 or 3.1% to close at 1,732.36. In Friday’s trading, Toronto TSX Composite Index closed down 86.35 or 0.9% to 9,762.85.

Of the stocks in S&P 500 index, 461 increased, 37 declined and 2 were unchanged.

Allegheny Energy led decliners in the S&P 500 index with a loss of 8.4% followed by losses in Cephalon Inc of 2.7%, in Lorillard Inc of 2.7%, in Tenet Healthcare of 2.6% and in Exelon Corp of 2.4%.

Janus Capital Group led gainers in the S&P 500 index with a surge of 17.8% followed by gains in Zions Bancorp of 16.4%, in Manitowoc Company of 15.0%, in Apartment Investment Corp of 13.9%, in Lennar Corp of 13.7% and in XL Capital Ltd of 13.7%.

South American Markets Indexes

Mexico Bolsa Index increased 593.77 or 2.5% to 23,935.49. Brazil Bovespa Stock Index surged 2,455.81 or 5% to 51,463.02.

Argentina Merval Index soared 6.3%, Chile Stock Market Select index increased 3.1% and Peru Lima General Index declined 0.3%. Colombia IGBC General Index edged higher 1.2% and Venezuela Stock Market Index edged up 0.7%.

Europe Markets Review

In London FTSE 100 Index closed higher 98.34 or 2.26% to 4,446.45, in Paris CAC 40 Index increased 76.34 or 2.41% to close at 3,245.39 and in Frankfurt DAX index higher 114.46 or 2.42% to close at 4,851.96. In Zurich trading SMI increased 84.45 or 1.58% to close at 5,435.12.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 226.33 or 2.44% to 9,038.69, Hang Seng index in Hong Kong increased 232.21 or 1.38% closed to 17,022.91, CSI 300 index in China higher 14.46 or 0.52% closed to 2,810.57. ASX 200 index in Australia decreased 37.60 or 1.00% closed to 3,735.60. The KL Composite index in Malaysia lower 2.20 or 0.22% closed to 1,012.01.

The Kospi Index in South Korea decreased 5.05 or 0.36% to close at 1,386.68. SET index in Thailand closed higher 6.30 or 1.18% to 540.22 and JSE Index in Indonesia increased 52.65 or 3.01% closed to 1,803.57. The Sensex index in India increased 2,110.79 or 17.34% closed to 14,284.21.

Commodities, Metals, and Currencies

Crude oil increased $2.81 to close at $59.15 a barrel for a front month contract, natural gas increased 8 cent to $4.10 per mBtu and gasoline futures increased 8.01 cents to close at 176.07 cents per gallon.

Wheat futures closed up 13.00 cents in Chicago trading and closed at $5.90 a bushel. Sugar increased 0.66 cent in trading at 15.61 cents a pound. Soybean future closed up 16.00 cent to $11.46 a bushel.

Gold decreased $13.10 in New York trading to close at $918.20 per ounce, silver closed down $0.25 to $13.755 per ounce and copper for the front month delivery increased 4.65 cents to $2.0640 per pound.

Dollar edged lower against euro to $1.3555 and closed up against the Japanese yen to 96.24.

Yields on 10-year U.S. bonds increased to 3.23% and with 30-year maturities closed up at 4.20%.