Oil Drops 4%; Volatile Stocks Ahead of Earnings

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

Crude oil fell 4% and copper and other base metals declined. U.S. stocks recovered at close ahead of earnings season. EMC raised its offer for NetApps. Rio Tinto agreed to sell its flexible packaging unit to Bemis for $1.2 billion. India plans to borrow $93 billion to fund its spending programs.

[R]4:00 PM New York, 9:00 PM London, 6:00 AM Sydney – Crude oil fell 4% and copper and other base metals declined. U.S. stocks recovered at close ahead of earnings season. EMC raised its offer for NetApps. Rio Tinto agreed to sell its flexible packaging unit to Bemis for $1.2 billion. India plans to borrow $93 billion to fund its spending program in the current fiscal year.[/R]

U.S. stocks closed higher after banks rallied and metals and mining related stocks closed lower. The copper declined to one-week low and crude oil futures fell 4%. Brazil sovereign debt rating may be revised higher.

The index of service sector declined at a slower pace in June. The economic contraction decline for the second month in a row lifting hopes that the economy may be in the early stage of stabilizing.

Bemis Company agreed to acquire flexible packaging division of Alcan controlled by Rio Tinto. Bemis will pay $1.2 billion of which $1 billion is in cash and $200 million is in company stock.

EMC ups bid for Data Domain as NetApp receives regulatory approval. Matrixx Initiatives drops 11% after class-action lawsuit.

Adidas completes €500 million unrated debt offering that yields 4.75%. Thyssen Krupp cancels sale industrial service unit. BASF will eliminate 3,700 positions and close 23 facilities of the recently acquired Ciba Holdings facilities. Societe Generale estimates €1.3 billion loss from CDS.

In London trading, mining and energy companies dropped after weak crude oil and metal prices. UK regulatory agency proposed tighter supervision and individual fines as high as 40% of compensation. Rio Tinto sells Alcan asset for $1.2 billion to Bemis Company.

In Japan trading, Nikkei 225 Average fell 1.4% on weak commodities and energy related stocks. Nippon Yusen and Mitsui OSK were among the leading decliners. The mail order house Nissen Holdings Co dropped 9.5% after it lowered its earnings estimate by 85%.

The budget in India focused on rural development, job creations in villages, infrastructure development in urban areas and streamlined taxes. The budget deficit will surge to 6.8% on sharply higher borrowing. The Sensex index plunged 5.8%, rupee declined 1.2% and government bond yields jumped 0.1%.

Australian stocks drop after commodities prices declined. Rio Tinto agreed to sell its flexible packaging division for $1.2 billion to Bemis. Australian companies raised A$90 billion in the financial year that ended in June 2009.

North American Markets

Dow Jones Industrial Average increased 44.13 or 0.5% to a close of 8,324.87, S&P 500 Index increased 2.30 or 0.3% to 898.72, and Nasdaq Composite Index edged lower 9.12 or 0.5% to close at 1,787.40. Toronto TSX Composite Index decreased 2.5% or 255.67 to 10,027.43.

Of the stocks in S&P 500 index, 280 increased, 218 declined and 2 were unchanged.

CIT Group led decliners in S&P 500 index with a fall of 11.6% followed by losses in AIG of 11.3%, in Titanium Metals of 9.8%, in MEMC Electric Materials of 8.5% and in Freeport McMoran of 7.6%.

Eastman Kodak led gainers in the S&P 500 index with a rise of 6.3% followed increase in Host Hotels and REIT of 6%, in American Express of 5.6% and in HCP Inc of 5.3%.

South American Markets Indexes

Mexico Bolsa Index decreased 302.90 or 1.3% to 23,742.49. Brazil Bovespa Stock Index decreased 312.22 or 0.6% to 50,622.47.

Argentina Merval Index decreased 1.6%. Chile Stock Market Select index edged lower 0.2%, Peru Lima General Index declined 1.6% and Colombia IGBC General Index fell 0.4%.

Europe Markets Review

In London FTSE 100 Index closed lower 41.37 or 0.98% to 4,194.91, in Paris CAC 40 Index decreased 37.35 or 1.20% to close at 3,082.16 and in Frankfurt DAX index lower 56.39 or 1.20% to close at 4,651.82. In Zurich trading SMI increased 15.64 or 0.29% to close at 5,354.15.

Asian Markets Review

The Nikkei 225 Average in Tokyo closed lower 135.20 or 1.38% to 9,680.87, Hang Seng index in Hong Kong decreased 223.99 or 1.23% to 17,979.41 and CSI 300 index in China closed higher 47.62 or 1.43% to 3,374.75. ASX 200 index in Australia decreased 44.50 or 1.16% to 3,783.70. The KL Composite index in Malaysia closed lower 6.86 or 0.64% to 1,065.83.

The Kospi Index in South Korea increased 8.90 or 0.63% to close at 1,428.94. JSE Index in Indonesia decreased 40.29 or 1.94% to 2,035.01. The Sensex index in India decreased 869.65 or 5.83% to 14,043.40. The Thailand markets were closed today.

Commodities, Metals, and Currencies

Crude oil decreased $2.43 to close at $64.30 a barrel for a front month contract, natural gas decreased 12 cents to $3.50 per mBtu and gasoline decreased 4.38 cents to 174.70 cents.

Wheat futures closed down 6.00 cents in Chicago trading to $5.002 a bushel. Sugar decreased 0.26 cent in trading at 17.32 cents a pound. Soybean future closed down 43.50 cents to $9.63 a bushel.

Gold decreased $6.40 in New York trading to close at $924.60 per ounce, silver closed down $0.13 to $13.27 per ounce and copper for the front month delivery decreased 3.55 cents to $2.27 per pound.

Dollar edged higher against euro to $1.3985 and closed down against the Japanese yen to 95.35.

Yield on 10-year U.S. bond increased to 3.51% and with 30-year maturities increased to 4.36%.