Jobs Report Supports Creeping Interest Rates

123jump.com Staff
05 Jun, 2009
New York City

Stock investors focus on commodities markets and volatility in crude oil prices remain steadfast. Unemployment rate increased to 25-year high as manufacturing sheds more jobs and is likely to contribute to higher unemployment for the rest of the year.

[R]5:00 PM New York, 10:00 PM London, 8:00AM Sydney – Stock investors focus on commodities markets and volatility in crude oil prices remain steadfast. Unemployment rate increased to 25-year high as manufacturing sheds more jobs and is likely to contribute to higher unemployment for the rest of the year.[/R]

The U.S. stocks traded sideways as bond yields rise and jobs data suggest sign of slower economic decline. Stocks followed what happened in the commodities and bonds markets. Bond yields perked up after investors focused on the inflation threat. The crude oil declined but is likely to trade volatile and drive sentiment in the stock market.

The U.S. unemployment rate surged to 25-year high as manufacturing sheds jobs. The monthly job losses of 345,000 were less than half of the average in the prior six months. Healthcare is the only segment that added workers.

Boston Properties sold 15 million shares. Wal-Mart plans to buy back $15 billion of its stocks. Rio Tinto increased after it scrapped its merger with Chinalco and planned to raise $15 billion.

UK input prices declined 0.4% in May and construction fell sharply in the first quarter. UK stocks closed higher as Prime Minister Brown shuffled his cabinet to consolidate his power. Xenophobic Australian lawmakers force Rio Tinto to abandon investment from China and strike a joint venture with BHP Billiton. The two largest mining companies in Australia will hold a monopoly position which could lead to price gouging.

Stocks in India closed higher for the thirteenth week in a row. The global rally in stocks and commodities and Parliament election results sustained investor enthusiasm. Businesses and investors are hoping that the government budget will focus on infrastructure spending.

Australian stocks followed the two deals in the mining industry. BHP Billiton and Rio Tinto agreed to form a joint venture to share haulage resources and iron ore mines in Pilbara region of Western Australia. Fortescue and BC Iron also agreed on a similar deal.

North American Markets

Dow Jones Industrial Average increased 12.89 or 0.2% to a close of 8,763.13, S&P 500 Index decreased 2.37 or 0.2% to 940.09, and Nasdaq Composite Index edged lower 0.60 or 0.03% to close at 1,849.42. Toronto TSX Composite Index closed up 92.05 or 0.9% to 10,569.29.

Of the stocks in S&P 500 index, 196 increased, 295 declined and 8 were unchanged.

Ciena Corp led decliners in the S&P 500 index with a loss of 7.4% followed by losses in Harley Davidson of 6.6%, in Lennar Corp of 6%, Du Pont of 6%, in Newmont Mining of 5.5% and in MBIA Inc of 5.4%.

AK Steel Holdings led gainers in the S&P 500 index with a rise of 7% followed by gains in Titanium Metals of 6.3%, in Goodyear Tire of 6%, in Flir Systems of 5.9% and in Interpublic Group of 5.6%.

South American Markets Indexes

Mexico Bolsa Index increased 164.98 or 0.7% to 24,913.01. Brazil Bovespa Stock Index declined 122.89 or 0.2% to 53,341.01.

Argentina Merval Index fell 1%, Chile Stock Market Select index increased 0.9% and Peru Lima General Index declined 1.2%. Colombia IGBC General Index edged higher 0.1% and Venezuela Stock Market Index edged down 0.4%.

Europe Markets Review

In London FTSE 100 Index closed higher 51.62 or 1.18% to 4,438.56, in Paris CAC 40 Index increased 27.02 or 0.82% to close at 3,339.05 and in Frankfurt DAX index higher 12.23 or 0.24% to close at 5,077.03. In Zurich trading SMI decreased 23.31 or 0.43% to close at 5,398.90.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 99.05 or 1.02% to 9,768.01, Hang Seng index in Hong Kong increased 176.76 or 0.96% closed to 18,679.53, CSI 300 index in China lower 14.44 or 0.49% closed to 2,939.31. ASX 200 index in Australia increased 36.60 or 0.93% closed to 3,971.20. The KL Composite index in Malaysia higher 11.53 or 1.08% closed to 1,075.50.

The Kospi Index in South Korea increased 16.57 or 1.20% to close at 1,394.71. SET index in Thailand closed higher 10.97 or 1.85% to 604.57 and JSE Index in Indonesia increased 46.22 or 2.27% closed to 2,078.93. The Sensex index in India increased 94.87 or 0.63% closed to 15,103.55.

Commodities, Metals, and Currencies

Crude oil decreased $0.33 to close at $68.48 a barrel for a front month contract, natural gas increased 6 cent to $3.87 per mBtu and gasoline decreased 0.49 cents to 195.72 cents.

Wheat futures closed down 12.25 cents in Chicago trading and closed at $6.25 a bushel. Sugar increased 0.29 cent in trading at 15.53 cents a pound. Soybean future closed down 48 cent to $12.25 a bushel.

Gold decreased $26.60 in New York trading to close at $955.70 per ounce, silver closed down $0.64 to $15.25 per ounce and copper for the front month delivery decreased 2.90 cents to $2.27 per pound.

Dollar edged lower against euro to $1.3969 and closed up against the Japanese yen to 98.72.

Yields on 10-year U.S. bonds increased to 3.84% and with 30-year maturities closed up at 4.64%.