U.S. Payroll Report Lift World Markets

Mukesh Buch
07 Aug, 2009
New York City

Less than expected decline in payrolls in July bolstered investor sentiment and lifted market indexes in Americas and Europe. AIG surged after it returned to quarterly profit. CBS, D R Horton and American Express advanced on recommendations. RBS in UK record rising bad debts.

[R]4:30 PM New York, 9:30 PM London, 6:30 AM Sydney – Less than expected decline in payrolls in July bolstered investor sentiment and lifted market indexes in Americas and Europe. AIG surged after it returned to quarterly profit. CBS, D R Horton and American Express advanced on recommendations.[/R]

U.S. stocks edged higher as economy confirmed falling unemployment level in July. Total of 247,000 jobs were lost in the month after 443,000 were eliminated in June according to the U.S. Labor Department. The unemployment rate declined to 9.4% from 9.5%.

Separately, the Federal Reserve estimated that American households’ borrowings decreased in June by $10.3 billion to $2.5 trillion. The decline represents annual decline rate of 4.9%.

AIG surged after it returned to profitability.

Avago Technologies open flood gates of fees and returns to private equity investors. The pricey offering values the company at 42 times 2008 earnings and may not bring rich rewards to investors in the public offering. The debt laden company has struggled with profitability in the last four years.

CBS Corporation led gainers in the S&P 500 index with a rise of 22.9%. AIG quarter returns to net profit. Chiquita Brands and Crocs Inc results beat estimates. Blue Nile quarterly sales declined 5.2% and net dropped 12.5%. California Pizza Kitchen revenues decreased 3.2% and net income dropped 7%.

European stocks edged higher. German exports in June increased 7% and trade surplus increased to €12.2 billion. Industrial output decreased 0.1% in June and declined 1.3% from a year ago. Allianz SE increased after net profit in the first decreased 29%. PSA Peugeot declined on rating downgrade.

UK producer price index in July increased 0.3% from June but declined 1.3% from a year ago. Royal Bank of Scotland said that results will not improve till 2011 and bad debt provision increased £7.5 billion. Thomson Reuters said first-half net increased 47%.

Elipda Memory surged in Tokyo trading on the expectations of government funding. Konica Minolta net plunged 98% in the first quarter. Bridgestone revised its quarterly ordinary income higher. Japan Airlines revenues plunged 32%.

Indian government carried out its $2.5 billion bond auction and plans to raise $60 billion in the next four weeks ahead of corporate borrowing season. Five-year and ten-year bonds dropped as yields hovered at 6.82% and 7% respectively. The bank employees commenced two-day strike.

North American Markets

Dow Jones Industrial Average increased 113.81 or 1.2% to a close of 9,370.07, S&P 500 Index added 13.40 or 1.4% to 1,010.48, and Nasdaq Composite Index edged higher 27.09 or 1.4% to close at 2,000.25. Toronto TSX Composite Index gained 91.96 or 0.9% to 10,885.33.

Of the stocks in S&P 500 index, 168 increased, 327 declined and 5 were unchanged.

VeriSign, Inc led the decliners in the S&P 500 index with a loss of 7.6% followed by losses in MBIA Inc of 5.4%, in Pepco Holdings, Inc of 5.2%, in Affiliated Computer Services, Inc of 2.6% and in MetroPCS Communications, Inc of 2.2%.

CBS Corporation led gainers in the S&P 500 index with a rise of 22.9% followed by gains in American International Group, Inc 12.3%, in Monster Worldwide, Inc of 8.5% and R.R. Donnelley & Sons Company of 8.1%.

South American Markets Indexes

Mexico Bolsa Index increased 377.14 or 1.4% to 28,179.55. Brazil Bovespa Stock Index advanced 574.63 or 1% to 56,329.51.

Argentina Merval Index increased 1.3%. Chile Stock Market Select index edged higher 0.1%, Peru Lima General Index added 0.1% and Colombia IGBC General Index increased 0.6% in Thursday’s trading.

Europe Markets Review

In London FTSE 100 Index closed higher 41.03 or 0.87% to 4,731.56, in Paris CAC 40 Index increased 43.31 or 1.25% to close at 3,521.14 and in Frankfurt DAX index higher 88.98 or 1.66% to close at 5,458.96. In Zurich trading SMI increased 58.32 or 0.95% to close at 6,026.40.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 24.00 or 0.23% to 10,412.09, Hang Seng index in Hong Kong decreased 523.87 or 2.51% to 20,375.37 and CSI 300 index in China lower 108.02 or 2.95% to 3,555.10. ASX 200 index in Australia decreased 26.90 or 0.62% to 4,299.40. The FTSE Bursa KL Composite index in Malaysia closed higher 0.91 or 0.08% to 1,184.88.

The Kospi Index in South Korea increased 10.96 or 0.70% to close at 1,576.00. SET index in Thailand closed lower 5.01 or 0.77% to 644.20 and JSE Index in Indonesia decreased 10.84 or 0.46% to 2,349.13. The Sensex index in India decreased 353.79 or 2.28% to 15,160.24.

Commodities, Metals, and Currencies

Crude oil decreased $1.39 to close at $70.55 a barrel for a front month contract, natural gas decreased 6 cents to $3.68 per mBtu and gasoline decreased 6.5 cents to 199.60 cents.

Wheat futures closed down 11.50 cents in Chicago trading to $5.16 a bushel. Sugar increased 1.01 cent in trading at 20.81 cents a pound. Soybean future closed up 8.5 cent to $10.38 a bushel.

Gold decreased $6.00 in New York trading to close at $956.90 per ounce, silver closed down $0.06 to $14.59 per ounce and copper for the front month delivery increased 1.10 cents to $2.76 per pound.

Dollar edged higher against euro to $1.418 and closed up against the Japanese yen to 97.60.

Yield on 10-year U.S. bonds increased to 3.85% and with 30-year maturities increased to 4.61%.