World Markets Fall on U.S. Employment Report

123jump.com Staff
02 Jul, 2009
New York City

World markets declined after the U.S. unemployment report on the fear that the U.S. may be in a prolonged recession. Copper, gold and crude oil prices fell. Markets in Europe dropped between 2% and 3% and Mexico fell 1.0%. Brazil and Canada lost 1%. The ECB left key lending rates unchanged.

[R]4:00 PM New York, 9:00 PM London, 6:00 AM Sydney – World markets declined after the U.S. unemployment report. The markets in Europe, Canada and Latin America fell on the worries that the U.S. may be in a prolonged recession. Copper, gold and crude oil prices fell.[/R]

The U.S. unemployment rose to 9.5% in June after employers laid-off 467,000 people in June. The news sparked new worries of the prolonged recession as manufacturing, construction and retail sectors remain weak.

The 26-year high unemployment rate came with the average weekly earnings dropping to the lowest level in a year. The average work week dropped to 33 hours, the lowest in 45 years dating back when records were initiated.

In all, 14.7 million people were unemployed in June and when counted the people who have stopped looking for jobs the unemployment rate surged to 16.5%. of all the job cuts in different industry sectors what was noticeable that the U.S. and state governments have started laying off people. The job cuts increased to 52,000 in June from 10,000 in May.

For the second quarter average monthly job losses were 436,000 down from 691,000 in the first quarter. With this kind data it is hard to believe any talks of V-shape or W-shape recovery.

European market indexes closed sharply lower after the U.S. unemployment rate increased to 9.5%. Daimler, Volkswagen, PSA Peugeot and Renault declined after Credit Suisse lowered its outlook on the sector.

UK and European market indexes closed sharply lower after the U.S. unemployment rate increased to 9.5%. Mining and financial sector stocks fell. London Stock Exchange fell 5% after it lowered fees. Elan surged 20% after Johnson & Johnson acquired a stake in the company. WPP Group dropped 7%.

Stocks in India traded sideways after the release of the Economic Survey from the Finance Ministry. The survey focused on the need for infrastructure spending, controlling the budget deficit and simplifying the taxes. Separately, the government increased retail prices of petrol and diesel.

North American Markets

Dow Jones Industrial Average decreased 220.60 or 2.6% to a close of 8,283.46, S&P 500 Index decreased 26.66 or 2.9% to 896.67, and Nasdaq Composite Index edged lower 49.20 or 2.7% to close at 1,796.52. Toronto TSX Composite Index decreased 1.2% or 129.00 to 10,245.91.

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

Gannett led the decliners in the S&P 500 index with a loss of 9.8% followed by losses in Genworth Financial of 9.5%, in Robert Half International of 9.5%, in Johnson Controls of 9.1% and in Kimco Realty of 8.54%.

Qwest Communication led gainers in the S&P 500 index with a rise of 2.7% followed by gains in M&T Bank Corp 2.4%, in Varian Medical Systems of 1.6% and in Linear Tech of 0.9%.

South American Markets Indexes

Mexico Bolsa Index decreased 472.55 or 1.9% to 24,051.46. Brazil Bovespa Stock Index decreased 518.84 or 1% to 51,024.94.

Argentina Merval Index decreased 3%. Chile Stock Market Select index edged lower 0.05%, Peru Lima General Index decreased 1.4% and Colombia IGBC General Index fell 0.2%.

Europe Markets Review

In London FTSE 100 Index closed lower 106.44 or 2.45% to 4,234.27, in Paris CAC 40 Index decreased 100.59 or 3.13% to close at 3,116.41 and in Frankfurt DAX index lower 186.95 or 3.81% to close at 4,718.49. In Zurich trading SMI decreased 117.71 or 2.15% to close at 5,355.23.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 63.78 or 0.64% to 9,876.15, Hang Seng index in Hong Kong decreased 200.68 or 1.09% to 18,178.05 and CSI 300 index in China increased 44.46 or 1.37% to 3,282.36. The ASX 200 index in Australia increased 3.30 or 0.09% to 3,877.30. The KL Composite index in Malaysia closed lower 0.69 or0.06% to 1,078.71.

The Kospi Index in South Korea decreased 0.18 or 0.01% to close at 1,411.48. SET index in Thailand closed lower 11.06 or 1.85% to 586.42 and JSE Index in Indonesia increased 5.87 or 0.28% to 2,065.75. The Sensex index in India increased 13.02 or 0.09% to 14,658.49.

Commodities, Metals, and Currencies

Crude oil decreased $2.59 to close at $66.72 a barrel for a front month contract, natural gas decreased 15 cents to $3.64 per mBtu and gasoline decreased 6.94 cents to 178.96 cents.

Wheat futures closed down 6.00 cents in Chicago trading to $5.002 a bushel. Sugar decreased 0.17 cent in trading at 17.58 cents a pound. Soybean future closed down 9.50 cents to $10.06 a bushel.

Gold decreased $10.80 in New York trading to close at $930.50 per ounce, silver closed down $0.41 to $13.35 per ounce and copper for the front month delivery decreased 3.45 cents to $2.296 per pound.

Dollar edged lower against euro to $1.4006 and closed down against the Japanese yen to 95.85.

Yield on 10-year U.S. bond decreased to 3.49% and with 30-year maturities closed declined at 4.32%.