New Issues Dominate World Markets; AIG Soars

Mukesh Buch
05 Aug, 2009
New York City

With the worldwide market strength the initial public offerings are slowly making a comeback in the U.S., Brazil, China and India. China based offering drew bids more than 100 times offer size. Earnings dominated trading sentiment in New York.

[R]4:30 PM New York, 9:30 PM London, 6:30 AM Sydney – With the worldwide market strength the initial public offerings are slowly making a comeback in the U.S., Brazil, China and India. China based offering drew bids more than 100 times offer size. Earnings dominated trading sentiment in New York.[/R]

The U.S. bonds rallied after the Treasury prepared to issue 30 year inflation protected bonds replacing the 20-year bonds. The 10-year and 30-year bonds closed higher. Goldman Sachs joined a chorus of other brokerage houses that increased the estimate of economic growth in the second half. Goldman estimated 3% growth compared to previous estimate of 1%.

Procter & Gamble, Electronic Arts and Emerson Electric were some of the companies that declined after the earnings release.

AIG surged 63% to $22 ahead of earnings and expectations that the leasing unit sale and a swap of debt for equity will improve the balance sheet.

Whole Foods Market surged on better than expected same store sales. BMC Software posts first quarter profit gain. China based Ctrip.com net profit surged 33% in second quarter. RBC Bearings first quarter results miss expectations.

European benchmark indexes traded sideways. AXA net in the first half declined 39%. Deutsche Boerse dropped 6.5% after net dropped 33% in the first half. Swiss Re reported quarterly net loss.

UK manufacturing output increased in June but declined in the quarter. Service index showed a slow and steady expansion. F&C Asset Management reported loss in the first-half. Ukraine based iron ore miner, Ferrexpo plc surged after reporting lower than expected profit decline.

Stocks in Japan edged lower on weak earnings from NTT, Nikon and Isuzu. Inpex, the crude oil refiner quarterly profit plunged 48%. Fast Retailing dropped after same store sales at one of its retail chains declined in July.

Hong Kong and Shanghai indexes edged lower. Everbright Securities initial public offering was oversubscribed more than 100 times. China Railway Construction garnered orders worth $700 million.

Mumbai stocks hovered near 14-month highs on earnings momentum. Axis Bank prepared to raise more than $1 billion from international investors. Hindustan Construction increased on a large new order. Reliance Infrastructure led consortium was awarded Mumbai Metro Rail project of $2.2 billion.

North American Markets

Dow Jones Industrial Average decreased 39.22 or 0.4% to a close of 9,280.97, S&P 500 Index gained 2.93 or 0.3% to 1,002.72, and Nasdaq Composite Index edged lower 18.26 or 0.9% to close at 1,993.05. Toronto TSX Composite Index increased 28.83 or 0.3% to 11,046.93.

Of the stocks in S&P 500 index, 159 increased, 337 declined and 4 were unchanged.

Dean Foods led the decliners in the S&P 500 index with a loss of 9.2% followed by losses in Baker Hughes Inc of 7.8%, in Molex Inc of 7.2%, in Electronic Arts of 6.8% and in Brown Forman of 4.6%.

AIG led gainers in the S&P 500 index with a surge of 62.7% followed by gains in Whole Foods Market 15.6%, in Genworth Financial, Inc of 10.8% and Citigroup Inc of 10.2%.

South American Markets Indexes

Mexico Bolsa Index increased 212.71 or 0.8% to 28,082.63. Brazil Bovespa Stock Index gained 346.01 or 0.6% to 56,384.08.

Argentina Merval Index increased 1.6%. Chile Stock Market Select index edged higher 0.4%, Peru Lima General Index decreased 1.3% and Colombia IGBC General Index decreased 0.5%.

Europe Markets Review

In London FTSE 100 Index closed lower 24.24 or 0.52% to 4,647.13, in Paris CAC 40 Index decreased 17.84 or 0.51% to close at 3,458.53 and in Frankfurt DAX index lower 64.01 or 1.18% to close at 5,353.01. In Zurich trading SMI decreased 27.87 or 0.47% to close at 5,911.91.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 122.48 or 1.18% to 10,252.53, Hang Seng index in Hong Kong decreased 301.66 or 1.45% to 20,494.77 and CSI 300 index in China lower 45.68 or 1.21% to 3,740.94. ASX 200 index in Australia decreased 44.80 or 1.04% to 4,264.50. The FTSE Bursa KL Composite index in Malaysia closed lower 0.39 or 0.03% to 1,179.49.

The Kospi Index in South Korea decreased 6.90 or 0.44% to close at 1,559.47. SET index in Thailand closed lower 1.07 or 0.17% to 640.16 and JSE Index in Indonesia decreased 43.03 or 1.82% to 2,317.06. The Sensex index in India increased 72.85 or 0.46% to 15,903.83.

Commodities, Metals, and Currencies

Crude oil increased $0.37 to close at $71.79 a barrel for a front month contract, natural gas was unchanged at $4.01 per mBtu and gasoline decreased 0.65 cents to 205.02 cents.

Wheat futures closed down 13.50 cents in Chicago trading to $5.56 a bushel. Sugar increased 0.02 cent in trading at 19.37 cents a pound. Soybean future closed up 13.50 cent to $10.45 a bushel.

Gold decreased $2.80 in New York trading to close at $966.90 per ounce, silver closed up $0.031 to $14.73 per ounce and copper for the front month delivery increased 3.00 cents to $2.82 per pound.

Dollar edged lower against euro to $1.44 and closed down against the Japanese yen to 94.91.

Yield on 10-year U.S. bond increased to 3.75% and with 30-year maturities decreased to 4.55%.