Fresh Start at GM; Weak Global Markets

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

The new GM hopes that fewer products, cleaner balance sheet and smaller workforce will help the automaker survive in a market that may have more to shrink. Stocks closed lower for the week as prospect of global economic recoveries look slim. Chevron issued weak outlook.

[R]4:00 PM New York, 9:00 PM London, 6:00 AM Sydney – The new GM hopes that fewer products, cleaner balance sheet and smaller workforce will help the automaker survive in a market that may have more to shrink. Stocks closed lower for the week. Chevron issued weak outlook.[/R]

The new and leaner General Motors emerged from bankruptcy today and vowed to focus on the basic business of making cars that people love to drive. The new General Motors will operate with 20% fewer employees, 35% less executives and international operations that will be operated from Shanghai, China. The company will also have fewer cars in its portfolio.

The General Motors is banking on retaining its market share in a market that may not be finished shrinking. Last November at Congressional hearing GM was estimating 2009 industry auto sales between 11 million and 12 million units. However, sales in the first half of the year are running at 10 million units.

In bankruptcy, General Motors leaves behind $176.4 billion in liabilities and the GM will have $11 billion debt to the U.S. government.

European markets are facing bearish investment sentiments as global economic recovery prospect dim. Italian industrial production in May was unchanged but French industrial output increased. UK wholesale prices declined. Arcelor Mittal is threatened with coal mining seizures in Siberia.

Stocks in London traded lower. The June month producer price index declined at a faster pace than in May. Insurance companies stocks fell after Aviva was the subject of market rumors of imminent dividend cut.

Stocks in Japan edged lower for the eight day in a row. Yen hovered at 4-month high against dollar and euro and investors turned cautious ahead of earnings next week. Investors are increasingly questioning if the four month rally has come to an end.

North India recorded weakest monsoon rainfall in June in the last 83 years. Industrial production in May increased 2.7% after April data was revised lower to increase of 1.2% from 1.4%. Infosys earnings increased 18% in the fiscal first quarter and increased the lower range of its earnings guidance.

North American Markets

Dow Jones Industrial Average decreased 36.65 or 0.45% to a close of 8,146.52, S&P 500 Index decreased 3.55 or 0.4% to 879.13, and Nasdaq Composite Index edged higher 3.48 or 0.20% to close at 1,756.03. Toronto TSX Composite Index decreased 26.79 or 0.3% to 9,747.13.

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

CIT Group Inc led the decliners in the S&P 500 index with a loss of 32.2% followed by losses in American International Group, Inc of 7.2%, in Dynegy Inc of 4.5%, in Genworth Financial, Inc of 3.9% and in Tenet Healthcare Corporation of 3.3%.

Memc Electronic Materials Inc led gainers in the S&P 500 index with a rise of 4.8% followed by gains in PerkinElmer, Inc 4.5%, in Cognizant Technology Solutions Corporation of 3.9% and Yahoo! Inc of 3.5%.

South American Markets Indexes

Mexico Bolsa Index increased 21.99 or 0.1% to 23,656.26. Brazil Bovespa Stock Index increased 43.23 or 0.1% to 49,220.78.

Argentina Merval Index decreased 2.8% in Wednesday trading. Chile Stock Market Select index edged lower 0.2%, Peru Lima General Index fell 0.7% and Colombia IGBC General Index fell 0.2%.

Europe Markets Review

In London FTSE 100 Index closed lower 31.49 or 0.76% to 4,127.17, in Paris CAC 40 Index decreased 42.84 or 1.42% to close at 2,983.10 and in Frankfurt DAX index lower 53.76 or 1.16% to close at 4,576.31. In Zurich trading SMI decreased 67.58 or 1.27% to close at 5,237.81.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 3.78 or 0.04% to 9,287.28, Hang Seng index in Hong Kong decreased 82.17 or 0.46% to 17,708.42, CSI 300 index in China higher 2.01 or 0.06% to 3,398.31. ASX 200 index in Australia increased 30.80 or 0.82% to 3,794.10. The FTSE Bursa KL Composite index in Malaysia closed higher 2.08 or 0.20% to 1,067.76.

The Kospi Index in South Korea decreased 2.27 or 0.16% to close at 1,428.62. SET index in Thailand closed lower 15.96 or 2.74% to 566.03 and JSE Index in Indonesia decreased 20.88 or 1.00% to 2,063.09. The Sensex index in India decreased 253.24 or 1.84% to 13,504.22.

Commodities, Metals, and Currencies

Crude oil decreased $0.40 to close at $60.01 a barrel for a front month contract, natural gas increased 0.04 cents to $3.36 per mBtu and gasoline decreased 1.03 cents to 165.35 cents.

Wheat futures closed down 3.50 cents in Chicago trading to $5.18 a bushel. Sugar increased 0.17 cent in trading at 17.27 cents a pound. Soybean future closed up 1 cent to $9.17 a bushel.

Gold decreased $4.50 in New York trading to close at $911.70 per ounce, silver closed down $0.29 to $12.64 per ounce and copper for the front month delivery decreased 1.45 cents to $2.22 per pound.

Dollar edged higher against euro to $1.3950 and closed down against the Japanese yen to 92.40.

Yield on 10-year U.S. bond decreased to 3.29% and with 30-year maturities decreased to 4.19%.