World Markets Focus on Goldman, Retail Sales

Sarla Buch
14 Jul, 2009
New York City

Banks and financial brokers rallied after Goldman Sachs reported sharply higher earnings in the second quarter. Retail sales in May increased 0.6% and inventories declined 1%. Dell Inc fell on earnings worries and CSX increased after it reported in-line earnings.

[R]4:00 PM New York, 9:00 PM London, 6:00 AM Sydney – Banks and financial brokers rallied after Goldman Sachs reported sharply higher earnings in the second quarter. Retail sales in May increased 0.6% and inventories declined 1%. Dell Inc fell on earnings worries and CSX increased after it reported in-line earnings.[/R]

U.S. stocks closed higher after Goldman Sachs reported a surge in revenues and earnings. The record increase in compensation also prompted calls from lawmakers and regulators to reign in the compensation at the government supported financial institutions.

Goldman Sachs reported second quarter revenues surged 46% to $113.76 billion and net earnings soared 89% to $3.45 billion. The corporations around the world took opportunity to raise capital in stocks and debt offering lifting underwriting revenues in the quarter.

The Commerce Department reported advanced estimate of retail sales in June adjusted for seasonal variations increased 0.6% to from May and declined 9% from a year ago month. The May inventories declined 1% and inventories to sales ratio at the end of the month increased to 1.42 from 1.27 in May 2008. Inventories from a year ago declined 8% in May.

Banks and automobiles makers stocks gained in European trading. The sharply higher earnings from Goldman Sachs in New York lifted banking stocks in Europe and UK. Software AG proposed to acquire IDS Scheer AG in a bid that values the company at 477 million euros.

Mining stocks rally in London lifted FTSE 100 index higher. Britvic Plc edged up 3% after it estimated higher than expected annual earnings. The industrial chain maker Renold dropped 7% after full year earnings plunged 72%.

Stocks in Japan rebounded after a sell-off that has lasted two weeks. Banks, securities and commodities companies closed higher. Hisamitsu Pharmaceuticals agreed to acquire Miami, Florida based Noven Pharmaceuticals for $430 million. Nissan surged after it increased production in China.

Stocks in Mumbai trading rebounded on the rainy forecast and firmer global markets. Energy and metals sectors and stocks in banking gained in trading. HDFC Bank and State Bank of Bikaner & Jaipur advanced on earnings. Aban Offshore surges on Morgan Stanley recommendation.

Australian stocks recorded single day best gain in the last seven months on a global rally in stocks and optimism of better earnings. However, trading volumes were thin. Energy Resources, the largest uranium miner reported 44% increase in output. Cochlear plunged declined 4% after earnings.

North American Markets

Dow Jones Industrial Average increased 27.81 or 0.3% to a close of 8,359.49, S&P 500 Index increased 4.79 or 0.5% to 905.84, and Nasdaq Composite Index edged higher 6.52 or 0.4% to close at 1,799.73. Toronto TSX Composite Index increased 94.22 or 1% to 9,986.15.

Of the stocks in S&P 500 index, 359 increased, 138 declined and 3 were unchanged.

Dell Inc led the decliners in the S&P 500 index with a loss of 8.1% followed by losses in Humana Inc of 7.7%, in KeyCorp of 3.7%, in PNC Financial of 3.1% and in Genworth Financial of 3%.

CIT Group Inc led gainers in the S&P 500 index with a rise of 21.5% followed by gains in CSX Corp 7.0%, in Harman International of 6.6% and Interpublic Group of 6.2%.

South American Markets Indexes

Mexico Bolsa Index increased 388.69 or 1.6% to 24,340.65. Brazil Bovespa Stock Index decreased 314.35 or 0.6% to 48,872.58.

Argentina Merval Index decreased 0.8%. Chile Stock Market Select index edged higher 1.1%, Peru Lima General Index added 0.9% and Colombia IGBC General Index added 0.7%.

Europe Markets Review

In London FTSE 100 Index closed higher 35.55 or 0.85% to 4,237.68, in Paris CAC 40 Index increased 29.79 or 0.98% to close at 3,081.87 and in Frankfurt DAX index higher 59.35 or 1.26% to close at 4,781.69. In Zurich trading SMI increased 49.76 or 0.94% to close at 5,365.05.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 211.48 or 2.34% to 9,261.81, Hang Seng index in Hong Kong increased 631.10 or 3.66% to 17,885.73 and CSI 300 index in China higher 93.74 or 2.79% to 3,454.75. The ASX 200 index in Australia increased 129.60 or 3.47% to 3,867.10. The FTSE Bursa KL Composite index in Malaysia closed higher 15.97 or 1.50% to 1,079.63.

The Kospi Index in South Korea increased 7.44 or 0.54% to close at 1,385.56. SET index in Thailand closed higher 15.20 or 2.70% to 577.75 and JSE Index in Indonesia increased 36.44 or 1.80% to 2,056.58. The Sensex index in India increased 453.38 or 3.38% to 13,853.70.

Commodities, Metals, and Currencies

Crude oil decreased $0.27 to close at $59.42 a barrel for a front month contract, natural gas increased 0.19 cents to $3.45 per mBtu and gasoline increased 0.11 cents to 164.05 cents.

Wheat futures closed down 12.75 cents in Chicago trading to $5.30 a bushel. Sugar increased 0.14 cent in trading at 17.68 cents a pound. Soybean future closed up 6.50 cent to $9.18 a bushel.

Gold increased $2.30 in New York trading to close at $924.80 per ounce, silver closed up $0.11 to $12.90 per ounce and copper for the front month delivery increased 6.65 cents to $2.28 per pound.

Dollar edged higher against euro to $1.3945 and closed up against the Japanese yen to 93.34.

Yield on 10-year U.S. bond increased to 3.45% and with 30-year maturities increased to 4.35%.