Oil, Natural Gas, Copper Drop; Stocks Follow

Mukesh Buch
29 Jul, 2009
New York City

Commodities dropped sharply after the latest crude oil inventories report from the U.S. and a plunge in Shanghai stocks. Oil dropped 6.5% and natural gas declined 4%. Treasury auction of $39 billion drew more than expected interest.

[R]4:00 PM New York, 9:00 PM London, 6:00 AM Sydney – Commodities dropped sharply after the latest crude oil inventories report from the U.S. and a plunge in Shanghai stocks. Oil dropped 6.5% and natural gas declined 4%. Treasury auction of $39 billion drew more than expected interest.[/R]

U.S. stocks traded sideways after the release of crude oil inventories and durable goods orders. Shanghai benchmark index plunged more than 5% after investors worried of a government crackdown on new loans and rising money supply.

The oil price declined 6%, natural gas prices fell 4%. Futures of gold decreased 1.3% and silver dropped 3.5%. ExxonMobil and Alcoa in the U.S. trading fell and in China Jiangxi Copper and PetroChina declined.

The auction of U.S. Treasuries of $39 billion of five-year notes attracted higher than expected interest dragging the interest level lower. The latest Fed report on the economic conditions around the nation suggested that economy remains weak but the pace of decline has begun to slow.

Yahoo! and Microsoft agree to partner on a search technology and advertising revenue sharing. Microsoft will gain higher visibility for Bing and raise competitive pressures on Google. Yahoo will retain 88% ad revenues for the first ten years but Microsoft will not make any upfront payment.

European markets closed higher after earnings lifted stocks in chemical, drugs auto and industrial sectors. Bayer, Akzo Nobel and Sanofi gained. SAP second quarter sales fell 10%. Daimler took €387 million charge related to its divestment in Chrysler stake. ArcelorMittal reported quarterly net loss.

UK stocks edged higher as mortgage lending in June increased. BG Group earnings fell 31% on lower energy prices. Cadbury first half profit surged 177%. The auto dealer Inchcape surged after it reported better than expected earnings.

Nissan reported its third quarterly loss and Honda first quarter net plunged 96%. Yahoo Japan surged after it estimated higher sales and earnings in the second quarter. Nippon steel declined after it estimated loss in the second quarter.

Stocks in Shanghai plunged after investors worried of the government crackdown on new loans and housing bubble. The benchmark index has surged more than 75% in the last nine months. China Cosco dropped after it estimated a loss in the first half on weak container and dry bulk cargo.

Mumbai stocks retreated after sharp gains in the last ten days and on earnings jitters. Jindal Steel surged after its earnings gained on currency bets. Aditya Birla Nuvo Ltd dropped on poor results. DLF fell back from its recent highs ahead of earnings. National Fertilizers declined.

North American Markets

Dow Jones Industrial Average decreased 26.00 or 0.3% to a close of 9,070.72, S&P 500 Index decreased 4.47 or 0.5% to 975.15, and Nasdaq Composite Index edged lower 7.75 or 0.4% to close at 1,967.76. Toronto TSX Composite Index decreased 115.21 or 1.1% to 10,455.33.

Of the stocks in S&P 500 index, 171 increased, 323 declined and 6 were unchanged.

Meredith Corp led the decliners in the S&P 500 index with a loss of 12.8% followed by losses in Yahoo Inc of 12%, in Sprint Nextel Corporation of 11.7%, in Sealed Air Corporation of 9.5% and in Moody’s Corp of 7.6%.

Fidelity National Corp led gainers in the S&P 500 index with a rise of 9% followed by gains in McKesson Corp 8.9%, in Life Technologies Corp of 7.6% and Massey Energy Company of 6.8%.

South American Markets Indexes

Mexico Bolsa Index decreased 334.25 or 1.3% to 26,516.50. Brazil Bovespa Stock Index decreased 737.01 or 1.4% to 53,734.54.

Argentina Merval Index decreased 0.6%. Chile Stock Market Select index edged lower 0.1%, Peru Lima General Index added 0.6% and Colombia IGBC General Index decreased 0.2%.

Europe Markets Review

In London FTSE 100 Index closed higher 18.69 or 0.41% to 4,547.53, in Paris CAC 40 Index increased 34.65 or 1.04% to close at 3,365.62 and in Frankfurt DAX index higher 95.58 or 1.85% to close at 5,270.32. In Zurich trading SMI increased 24.39 or 0.42% to close at 5,787.19.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 25.98 or 0.26% to 10,113.24, Hang Seng index in Hong Kong decreased 489.04 or 2.37% to 20,135.50 and CSI 300 index in China lower 197.31 or 5.25% to 3,558.51. ASX 200 index in Australia decreased 26.70 or 0.64% to 4,142.80. The FTSE Bursa KL Composite index in Malaysia closed lower 7.90 or 0.67% to 1,164.48.

The Kospi Index in South Korea decreased 1.71 or 0.11% to close at 1,524.32. SET index in Thailand closed lower 7.08 or 1.14% to 614.88 and JSE Index in Indonesia decreased 11.29 or 0.50% to 2,225.81. The Sensex index in India decreased 158.48 or 1.03% to 15,173.46.

Commodities, Metals, and Currencies

Crude oil decreased $4.26 to close at $62.97 a barrel for a front month contract, natural gas decreased 14 cents $3.55 per mBtu and gasoline decreased 6.31 cents to 184.75 cents.

Wheat futures closed down 4.75 cents in Chicago trading to $5.11 a bushel. Sugar increased 0.06 cent in trading at 18.56 cents a pound. Soybean future closed down 11.00 cent to $9.16 a bushel.

Gold decreased $9.60 in New York trading to close at $929.50 per ounce, silver closed down $0.44 to $13.30 per ounce and copper for the front month delivery decreased 3.65 cents to $2.48 per pound.

Dollar edged lower against euro to $1.40 and closed up against the Japanese yen to 95.10.

Yield on 10-year U.S. bond decreased to 3.66% and with 30-year maturities decreased to 4.51%.