Earnings Views Lift American, European Indexes

Mukesh Buch
20 Jul, 2009
New York City

U.S. indexes added to the 7% last week as cautious optimism about earnings lifted market indexes. The improved economic sentiment lifted commodities prices which in turn lifted markets in Australia, Canada, Brazil and China. India and U.S. signed several agreements involving nuclear power plants.

[R]4:00 PM New York, 9:00 PM London, 6:00 AM Sydney – U.S. stocks added to the 7% gain last week as cautious optimism about earnings lifted market indexes. The improved economic sentiment lifted commodities prices which in turn lifted markets in Australia, Canada, Brazil and China. India and U.S. signed several agreements involving nuclear power plants and defense equipment.[/R]

The calm markets in New York with optimism about the current earnings season lifted markets in Canada, Latin America and aided European markets to close higher. Asian markets rallied on the rise in commodities prices with copper at five-week higher.

Of the 55 companies reporting earnings in the S&P 500 index, most have exceeded or met analysts’ expectations. The early positive indication on the earnings lifted the broader index 7% last week. The Conference Board index of leading indicators increased 0.7% in June after revised 1.3% increase in May.

Eaton second quarter earnings plunged 92% and lowered its operating earnings outlook for the year. CIT surged after it arranged a rescue loan of $3 billion from its bond holders. S&P 500 index will replace CIT with Red Hat, Inc.

The UK indexes edged higher after miners and financials closed up. ICAP, the inter-broker dealer completed raised 300 million euros through 5-year bonds. The pound gained after homes for sale were listed at higher prices. Domino’s Pizza UK increased 7% on 15% gains in sales in the first half.

Commodities and shipping linked stocks rallied. Earnings optimism and brokerage recommendation of Hong Kong property stocks helped benchmark indexes. China International Travel Service Corp filed its public offering prospectus.

Sensex in Mumbai trading soared 13.4% in last five trading sessions. Kirloskar Pneumatic first quarter plunges into loss. TCS results with a positive outlook lifted market sentiment. Ambani family feud is joined by the Indian government staking claim to natural gas and its authority to price.

Australian stocks edged higher on a rally in copper prices and cash iron ore price above $90 a ton as the mineral shipment to China increase. Energy Resources, the operator of uranium mines increased after it estimated first half earnings to rise three-fold.

North American Markets

Dow Jones Industrial Average increased 104.21 or 1.2% to a close of 8,848.15, S&P 500 Index increased 10.75 or 1.2% to 941.13, and Nasdaq Composite Index edged higher 22.68 or 1.20% to close at 1,909.29. Toronto TSX Composite Index increased 171.29 or 1.7% to 10,540.71.

Of the stocks in S&P 500 index, 431 increased, 67 declined and 2 were unchanged.

Harman International led the decliners in the S&P 500 index with a loss of 17.2% followed by losses in Tyson Foods, Inc of 9.3%, in Citigroup Inc of 7.6%, in Marshall & Ilsley of 5.8% and in Bank of America of 5.1%.

CIT Group Inc led gainers in the S&P 500 index with a rise of 78.6% followed by gains in Wynn Resorts Ltd 10.1%, in CBS Corp of 10% and in New York Times of 9.8%.

South American Markets Indexes

Mexico Bolsa Index increased 542.10 or 2.1% to 26,184.06. Brazil Bovespa Stock Index added 1,082.44 or 2.1% to 53,154.93.

Argentina Merval Index increased 1.6%. Chile Stock Market Select index edged higher 1.1%, Peru Lima General Index added 1.7%.

Europe Markets Review

In London FTSE 100 Index closed higher 54.87 or 1.25% to 4,443.62, in Paris CAC 40 Index increased 52.48 or 1.63% to close at 3,270.94 and in Frankfurt DAX index higher 51.75 or 1.04% to close at 5,030.15. In Zurich trading SMI increased 33.79 or 0.60% to close at 5,627.93.

Asian Markets Review

The Hang Seng index in Hong Kong increased 696.71 or 3.70% to 19,502.37 and CSI 300 index in China higher 71.31 or 2.03% to 3,591.12. ASX 200 index in Australia increased 49.50 or 1.24% to 4,050.30. The FTSE Bursa KL Composite index in Malaysia closed higher 18.35 or 1.64% to 1,139.25. The Tokyo market was closed today.

The Kospi Index in South Korea increased 38.41 or 2.67% to close at 1,478.51. SET index in Thailand closed higher 17.56 or 2.95% to 613.67. The Sensex index in India increased 446.09 or 3.03% to 15,191.01. The Indonesian markets were closed today.

Commodities, Metals, and Currencies

Crude oil increased $0.63 to close at $64.19 a barrel for a front month contract, natural gas decreased 0.01 cents to $3.66 per mBtu and gasoline increased 1.91 cents to 178.80 cents.

Wheat futures closed up 0.50 cents in Chicago trading to $5.43 a bushel. Sugar increased 0.44 cent in trading at 17.74 cents a pound. Soybean future closed down 0.55 cent to $9.23 a bushel.

Gold increased $11.40 in New York trading to close at $948.90 per ounce, silver closed up $0.24 to $13.65 per ounce and copper for the front month delivery increased 4.85 cents to $2.47 per pound.

Dollar edged lower against euro to $1.422 and closed up against the Japanese yen to 94.24.

Yield on 10-year U.S. bond decreased to 3.61% and with 30-year maturities decreased to 4.51%.