World Leaders Talk; China Auto Sales Surge

Mukesh Buch
09 Jul, 2009
New York City

World leaders vowed to maintain the currency parity and avoid the devaluation to grow at the expense of other nations. The G-8 and G-5 leaders agreed to conclude trade talks as early as 2010. China vehicle sales surged nearly 50% in June as government eased lending.

[R]4:00 PM New York, 9:00 PM London, 6:00 AM Sydney – World leaders vowed to maintain the currency parity and avoid the devaluation to grow at the expense of other nations. The G-8 and G-5 leaders agreed to conclude trade talks as early as 2010. China vehicle sales surged nearly 50% in June as government eased lending.[/R]

The leaders of G-8 nations vowed to avoid competitive devaluation to maintain the current order and keep faith in the U.S. dollar as the global reserve currency. The so called G-5 nations including China, India, Brazil, Russia and Mexico agreed with rich nation leaders not to engage in devaluation and raise protective tariff that could impede world trade. The leaders agreed to conclude world trade deal in 2010.

U.S. retailers declined after reporting weak June month same-store sales. The decline was widespread across all types of retailers including discount retailers. Teen apparel retailers and luxury stores reported worst sales declines in the month.

Hapag-Lloyd AG is seeking capital from shareholders including TUI AG and loans totaling between 1.4 billion and 1.75 billion euros. The news was reported by Bloomberg and Reuters but earlier the spokesperson of the company denied that the company is seeking any capital increase.

Banco Santander SA in a regulatory filing said that the second current quarter profit is in-line with its expectations and earlier the bank’s chairman Emilio Botin had suggested that bank will meet last year annual earnings of 8.88 billion euros.

The Bank of England left its key lending rate unchanged at 0.5% and its plan to purchase assets at £125 billion. Trade deficit in goods declined to £6.3 billion but the deficit in goods and services was unchanged at 2.2 £billion. Associated British Foods third quarter revenues increased 15%.

Japan stocks fell after yen advanced for the sixth month in a row. Strong yen may crimp earnings of exporters in the current quarter. The retailer Bic Camera declined after its nine months profit plunged 57%. Fast Retailing estimated full year profit to rise 6.3%.

Vehicle sales in China in June surged 48% to 1.14 million on tax subsidies and other incentives from the government. The news lifted automakers in Shanghai and Hong Kong trading. In other news, the People’s Bank of China said that new loans in June totaled 1.53 trillion yuan and loans in the first half surged above three times the same period a year ago.

Investors largely ignored the IMF revised higher the economic growth estimate of India for 2009 and 2010. The Washington based international lender has spotty reputation for its policies. Wholesale inflation declined at the end of June.

Stocks in Australia recovered in the afternoon. Unemployment in June increased to 5.8% as employers eliminated 21,400 jobs. ANZ Banking Group raised A$2.2 billion after it raised A$2.5 billion in May.

North American Markets

Dow Jones Industrial Average increased 4.76 or 0.06% to a close of 8,183.17, S&P 500 Index increased 3.12 or 0.4% to 882.68, and Nasdaq Composite Index edged higher 5.38 or 0.31% to close at 1,752.55. Toronto TSX Composite Index increased 1.3% or 120.47 to 9,773.92.

Of the stocks in S&P 500 index, 312 increased, 185 declined and 3 were unchanged.

American International Group, Inc led the decliners in the S&P 500 index with a loss of 27.6% followed by losses in Allegheny Technologies Incorporated of 6%, in Abercrombie & Fitch of 4.2% and in Limited Brands of 4%.

KB Home led gainers in the S&P 500 index with a rise of 9.3% followed by gains in Huntington Bancshares Incorporated 8%, in Marshall & Ilsley of 7.1% in Micron Technology of 6.8% and in Wynn Resorts Ltd 6.7%.

South American Markets Indexes

Mexico Bolsa Index increased 165.29 or 0.7% to 23,634.27. Brazil Bovespa Stock Index decreased 279.15 or 0.6% to 49,177.55 in Wednesday trading.

Argentina Merval Index decreased 2.8% in Wednesday trading. Chile Stock Market Select index edged higher 0.8%, Peru Lima General Index surged 3% and Colombia IGBC General Index fell 1.7%.

Europe Markets Review

In London FTSE 100 Index closed higher 18.43 or 0.45% to 4,158.66, in Paris CAC 40 Index increased 16.13 or 0.54% to close at 3,025.94 and in Frankfurt DAX index higher 57.42 or 1.26% to close at 4,630.07. In Zurich trading SMI increased 16.00 or 0.30% to close at 5,305.39.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 129.69 or 1.38% to 9,291.06, Hang Seng index in Hong Kong increased 69.52 or 0.39% to 17,790.59, CSI 300 index in China closed higher 44.04 or 1.31% to 3,396.30. ASX 200 index in Australia decreased 4.60 or 0.12% to 3,763.30. The FTSE Bursa KL Composite index in Malaysia closed higher 0.21 or 0.02% to 1,065.68.

The Kospi Index in South Korea decreased 0.13 or 0.01% to close at 1,430.89. SET index in Thailand closed higher 6.12 or 1.06% to 581.99 and JSE Index in Indonesia increased 0.73 or 0.03% to 2,083.97. The Sensex index in India decreased 11.69 or 0.08% to 13,757.46.

Commodities, Metals, and Currencies

Crude oil increased $0.34 to close at $60.48 a barrel for a front month contract, natural gas increased 0.06 cents to $3.42 per mBtu and gasoline increased 3.15 cents to 166.48 cents.

Wheat futures closed up 5.00 cents in Chicago trading to $5.22 a bushel. Sugar decreased 0.11 cent in trading at 17.10 cents a pound. Soybean future closed up 24 cents to $9.16 a bushel.

Gold increased $3.10 in New York trading to close at $912.40 per ounce, silver closed down $0.007 to $12.84 per ounce and copper for the front month delivery decreased 6.05 cents to $2.21 per pound.

Dollar edged lower against euro to $1.4034 and closed up against the Japanese yen to 93.00.

Yield on 10-year U.S. bond increased to 3.41% and with 30-year maturities increased to 4.30%.