Market Puts Faith in Home Sales; AIG Plunges

Mukesh Buch
01 Jul, 2009
New York City

Home sales indication and slower contraction in manufacturing lifted trading sentiment. Construction activity in May declined 11.7% from a year ago. Crude oil inventories declined but are still at the upper end of the average at the end of last week. AIG plunges 22% after it lost 13% yesterday.

[R]4:00 PM New York, 9:00 PM London, 6:00 AM Sydney – Home sales indication and slower contraction in manufacturing lifted trading sentiment. Construction activity in May declined 11.7% from a year ago. Crude oil inventories declined but are still at the upper end of the average at the end of last week. AIG plunges 22% after it lost 13% yesterday.[/R]


The U.S. stocks gained after the manufacturing index showed a smaller contraction in June and an index of pending home sales indicated higher activities. The start of the second quarter also bolstered the index after multi-year record gains in the second quarter.

AIG plunged 22% after it lost 13% yesterday after it warned of material losses from derivative contracts sold to European investors.

European indexes closed higher after China reported manufacturing expansion. Retailers gained after the release of German retail sales data. Sodexo increased 3.7% after third quarter sales increased 11%. Auto registration in Italy increased 12% in June on government incentives.

Miners lead the gainers after metal prices rise. Copper, zinc and tin closed higher after China reported manufacturing expansion. Marks & Spencer increased after it reported smaller declines in same store sales. National Express chief resigns and hands over the eastern railroad franchise.

Japanese stocks closed lower ahead of earnings. Orix, All Nippon and Mizuho Financial plan to raise total of $9 billion. Nikkei index surged 22.8% in first fiscal quarter on a surge in global markets. Construction equipment makers gained after Chinese index of manufacturing increased.

Stocks indexes in China closed higher after the manufacturing index advanced. The rise lifted stocks of steel makers, equipment makers, realty companies and home builders. The Shanghai Composite index closed above 3,000, the highest close since June 2008 and rebound from a low of 1,706 in November.

Stocks in Mumbai closed higher led by a surge in education and auto related stocks. Tata Motors and Mahindra & Mahindra sales surged 19% and Maruti Suzuki sales soared 23%. Trade deficit in the first two months to May declined 50% in the current fiscal year.

North American Markets

Dow Jones Industrial Average increased 57.06 or 0.7% to a close of 8,504.06, S&P 500 Index increased 4.01 or 0.4% to 923.33, and Nasdaq Composite Index edged higher 10.68 or 0.6% to close at 1,845.72. Toronto markets were closed today.

Of the stocks in S&P 500 index, 355 increased, 136 declined and 8 were unchanged.

AIG led the decliners in the S&P 500 index with a loss of 22.1% followed by losses in Varian Medical Systems of 6.2%, in Metro PCS Communication of 5.1%, in CB Richard Ellis of 4.6% and in Sprint Nextel of 4.1%.

Constellation Brands, Inc led gainers in the S&P 500 index with a rise of 7.4% followed by gains in Ball Corporation 6%, in Janus Capital Group of 5.7% and Akamai Technology of 5.5%.

South American Markets Indexes

Mexico Bolsa Index increased 155.63 or 0.6% to 24,524.01. Brazil Bovespa Stock Index increased 78.32 or 0.2% to 51,543.78.

Argentina Merval Index increased 1.4%. Chile Stock Market Select index edged higher 0.5%, Peru Lima General Index increased 1.4% and Colombia IGBC General Index added 1.5%.

Europe Markets Review

In London FTSE 100 Index closed higher 91.50 or 2.15% to 4,340.71, in Paris CAC 40 Index increased 76.56 or 2.44% to close at 3,217.00 and in Frankfurt DAX index higher 96.80 or 2.01% to close at 4,905.44. In Zurich trading SMI increased 68.97 or 1.28% to close at 5,472.94.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 18.51 or 0.19% to 9,939.93, CSI 300 index in China closed higher 71.43 or 2.26% to 3,237.90. ASX 200 index in Australia decreased 80.90 or 2.05% to 3,874.00. The KL Composite index in Malaysia closed higher 4.16 or 0.39% to 1,079.40. The Hong Kong markets were closed today.

The Kospi Index in South Korea increased 21.59 or 1.55% to close at 1,411.66.JSE Index in Indonesia increased 33.10 or 1.63% to 2,059.88. The Sensex index in India increased 151.63 or 1.05% to 14,645.47. The Thailand markets were closed today.

Commodities, Metals, and Currencies

Crude oil decreased $0.67 to close at $69.22 a barrel for a front month contract, natural gas decreased 5 cents to $3.79 per mBtu and gasoline decreased 4.35 cents to 185.85 cents.

Wheat futures closed down 5.00 cents in Chicago trading to $5.06 a bushel. Sugar decreased 0.10 cent in trading at 17.75 cents a pound. Soybean future closed up 34.50 cents to $10.15 a bushel.

Gold increased $13.30 in New York trading to close at $940.70 per ounce, silver closed up $0.16 to $13.76 per ounce and copper for the front month delivery increased 6.70 cents to $2.3390 per pound.

Dollar edged lower against euro to $1.4150 and closed up against the Japanese yen to 96.63.

Yield on 10-year U.S. bond increased to 3.54% and with 30-year maturities closed unchanged at 4.33%.