Smooth Treasury Auction; U.S. Stocks Rise

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

The U.S. stocks closed higher on a strength in technology and energy companies. Better than expected consumer confidence data and widespread interest in U.S. Treasury short term debt auction also contributed to the market gain.

[R]5:00 PM New York, 10:00 PM London, 8:00AM Sydney – The U.S. stocks closed higher on strength in technology and energy companies. Better than expected consumer confidence data and widespread interest in U.S. Treasury short term debt auction also contributed to the market gain.[/R]

The U.S. stocks gained after better than expected consumer confidence and smooth auction of bonds at the U.S. Treasury lifted market indexes.

Despite the rise in yields and tightening of yield spreads between the short and long term bonds Treasury auction received interested from many central banks around the world. The bid-to-cover ratio was 2.63 indicating for every two dollars offered there were over 5 buyers.

The U.S. Treasury conducted it 2-year note auction and raised $40 billion and $61 billion of 3-month and 6-month T bills. The Treasury plans to raise $35 billion in five-year note tomorrow and $26 billion in 7-year notes on May 28.

Stocks in Europe rebounded after better than expected consumer confidence data in the U.S. Danone SA plans to raise 3 billion euros to repay debt.

Germany left its first quarter estimate of Gross Domestic Product a decline of 3.8% from the fourth quarter and 5.3% from the quarter a year ago. The decline was deepest in the four quarterly declines in a row. German exports in the first quarter declined 9.7% from the fourth quarter and fell at a faster pace than imports.

UK stocks staged a sharp reversal in the afternoon trading after the release of consumer confidence data in the U.S. The benchmark stock surged from a decline of 1.5% to close up 1%. Rio Tinto offered 33% discount for iron ore shipment till the end of March next year.

Investors in Japan focused on weak global market conditions and prospect of rising inflation as metals and energy prices stay elevated. Revised economic outlook from the Cabinet Office and the Bank of Japan failed to sway financial markets. Real estate developers and retailers closed higher.

Investors are still digesting the impact of recent share sales announced or completed by several companies. Investors are still digesting the impact of recent share sales announced or completed by several companies. In Hong Kong property stocks gained but in Shanghai energy related stocks fell.

Stocks in India declined on worries of rising government deficit and inflation. Investors worry that recent 8,000 crore rupees offering from real estate companies may dry liquidity in the market. Chief executive and family board members of Ranbaxy Laboratories resigned.


North American Markets

Dow Jones Industrial Average increased 196.17 or 2.4% to a close of 8,473.49, S&P 500 Index added 23.33 or 2.6% to 910.33, and Nasdaq Composite Index edged higher 58.42 or 3.5% to close at 1,750.43. Toronto TSX Composite Index closed up 216.40 or 2.2% to 10,285.90.

Of the stocks in S&P 500 index, 473 increased, 25 declined and 2 were unchanged.

Regions Financial led decliners in the S&P 500 index with a loss of 5.2% followed by losses in E*Trade Financial of 3.6%, in Tenet Healthcare of 2.2%, in Dow Chemical of 2% and in BMC Software Inc of 1.9%.

Zions Bancorp led gainers in the S&P 500 index with a surge of 14% followed by gains in Gannett Co of 10.1%, in Host Hotels of 9.9%, in MBIA Inc of 9%, in Starwood Hotels of 9% and in Polo Ralph Lauren of 8.7%.

South American Markets Indexes

Mexico Bolsa Index increased 441.12 or 1.8% to 24,640.08. Brazil Bovespa Stock Index gained 1,024.56 or 2% to 51,840.80.

Argentina Merval Index added 1.3%, Chile Stock Market Select index increased 0.9% and Peru Lima General Index increased 3.5%. Colombia IGBC General Index edged higher 3.5% and Venezuela Stock Market Index edged down 0.6%.

Europe Markets Review

In London FTSE 100 Index closed higher 46.43 or 1.06% to 4,411.72, in Paris CAC 40 Index increased 33.93 or 1.05% to close at 3,270.09 and in Frankfurt DAX index higher 67.15 or 1.37% to close at 4,985.60. In Zurich trading SMI decreased 14.97 or 0.27% to close at 5,431.27.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 36.19 or 0.39% to 9,310.81, Hang Seng index in Hong Kong decreased 130.26 or 0.76% closed to 16,991.56, CSI 300 index in China lower 32.95 or 1.20% closed to 2,719.76. ASX 200 index in Australia increased 50.50 or 1.35% closed to 3,788.40. The KL Composite index in Malaysia lower 1.51 or 0.14% closed to 1,051.63.

The Kospi Index in South Korea decreased 28.86 or 2.06% to close at 1,372.04. SET index in Thailand closed lower 7.82 or 1.42% to 542.69 and JSE Index in Indonesia decreased 33.38 or 1.77% closed to 1,857.59. The Sensex index in India decreased 323.99 or 2.33% closed to 13,589.23.

Commodities, Metals, and Currencies

Crude oil increased $0.21 to close at $62.66 a barrel for a front month contract, natural gas increased 3 cent to $3.57 per mBtu and gasoline futures increased 1.16 cents to close at 185.24 cents per gallon.

Wheat futures closed down 0.5 cents in Chicago trading and closed at $6.12 a bushel. Sugar increased 0.24 cent in trading at 15.94 cents a pound. Soybean future closed up 19.50 cent to $11.85 a bushel.

Gold decreased $5.40 in New York trading to close at $955.10 per ounce, silver closed down $0.09 to $14.60 per ounce and copper for the front month delivery increased 4.35 cents to $2.14 per pound.

Dollar edged higher against euro to $1.3990 and closed up against the Japanese yen to 94.99.

Yields on 10-year U.S. bonds increased to 3.55% and with 30-year maturities closed up at 4.49%.