U.S. Indexes Rise, Oil Up 4%; Shanghai Drops 20%

Mukesh Buch
19 Aug, 2009
New York City

World markets were unnerved after markets in Shanghai dropped 20% from their peaks only two weeks ago. Tighter credit conditions and regulatory regime focused on preventing housing bubble. Stocks in New York edged higher after crude oil inventories declined at the end of last week.

[R]4:30 PM New York, 9:30 PM London, 6:30 AM Sydney – World markets were unnerved after markets in Shanghai dropped 20% from their peaks only two weeks ago. Tighter credit conditions and regulatory regime focused on preventing housing bubble. Stocks in New York edged higher after crude oil inventories declined at the end of last week.[/R]

Global stock markets were unnerved after Shanghai index dropped as much as 5% with a total decline of 20% since it peaked on August 4. The tightening credit conditions as Beijing tries to limit the housing market gains. Investors questioned if China can pull world markets out of the current slump.

In New York, stocks in the early trading edged lower but rebounded after the release of weekly crude oil inventories report. Light trading volume also contributed to the daily volatility.

The crude oil inventories edged lower last week by 8.4 million barrels. Crude oil surged 4.7% to above $72 a barrel, highest since June 11 and near the level last seen in October last year.

EIA estimated that oil demand is down 0.1% from a year ago and inventories are edging lower as refiners use the crude oil in storage to process orders. The demand has stopped rising.

The New York Times Company led gainers in the S&P 500 index with a rise of 1.9%. BJ’s Wholesale Club second quarter profit drops but ahead of estimates. Giant Interactive Group Inc second quarter profit drops 34%. HP third quarter net earnings drop 19%.

German producer prices declined the sharpest in July in six decades. The OECD reported flat economic growth in the second quarter in the 30-member nations. Air France pulled out of Czech Air bid. VW common shares dropped after Qatar agreed to pay lower price.

UK stocks traded sideways. The Bank of England latest minutes showed that Governor King sought higher bond purchase limit which was not approved by the committee. John Menzies issued upbeat outlook for full year. Lookers Plc eliminates dividend on weak results. Rexam rights issue gets 95% bids.

Stocks in Mumbai edged lower after estimates of crops were revised lower on weak monsoon. Weak international commodities prices also dragged the sentiment. National Textile Corp may raise as much as $150 million in land sale in Mumbai.

North American Markets

Dow Jones Industrial Average increased 61.22 or 0.7% to a close of 9,279.16, S&P 500 Index increased 6.79 or 0.7% to 996.46, and Nasdaq Composite Index edged higher 13.32 or 0.7% to close at 1,969.24. Toronto TSX Composite Index increased 12.99 or 0.1% to 10,686.83.

Of the stocks in S&P 500 index, 369 increased, 125 declined and 6 was unchanged.

Southwest Air led the decliners in the S&P 500 index with a loss of 4.1% followed by losses in Metro PCS Communication of 3.9%, in Alcoa Inc of 3.4%, in Qwest Communication of 3.2% and in Host Hotels & REIT of 3.1%.

AIG led gainers in the S&P 500 index with a rise of 8.5% followed by gains in CBS Corp 5%, in Moody’s Corp of 4.5% and Limited Brands of 4.4%.

South American Markets Indexes

Mexico Bolsa Index increased 54.05 or 0.2% to 27,598.37 Brazil Bovespa Stock Index added 407.36 or 0.7% to 56,156.28.

Argentina Merval Index increased 0.03%. Chile Stock Market Select index edged lower 0.8%, Peru Lima General Index edged higher 0.7% and Colombia IGBC General Index added 0.3%.

Europe Markets Review

In London FTSE 100 Index closed higher 3.89 or 0.08% to 4,685.78, in Paris CAC 40 Index decreased 0.35 or 0.01% to close at 3,450.34 and in Frankfurt DAX index lower 18.76 or 0.36% to close at 5,231.98. In Zurich trading SMI decreased 27.04 or 0.45% to close at 5,980.79.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 80.96 or 0.79% to 10,204.00, Hang Seng index in Hong Kong decreased 352.04 or 1.73% to 19,954.23 and CSI 300 index in China lower 157.42 or 4.96% to 3,014.57. ASX 200 index in Australia decreased 7.80 or 0.18% to 4,373.80. The FTSE Bursa KL Composite index in Malaysia closed lower 8.88 or 0.76% to 1,155.53.

The Kospi Index in South Korea decreased 4.28 or 0.28% to close at 1,545.96. SET index in Thailand closed lower 8.97 or 1.40% to 631.28 and JSE Index in Indonesia decreased 59.24 or 2.53% to 2,277.75. The Sensex index in India decreased 225.62 or 1.50% to 14,809.64.

Commodities, Metals, and Currencies

Crude oil increased $3.22 to close at $72.42 a barrel for a front month contract, natural gas increased 1 cent to $3.10 per mBtu and gasoline increased 0.03 cents to 203.49 cents.

Wheat futures closed down 4.75 cents in Chicago trading to $4.9350 a bushel. Sugar increased 0.01 cent in trading at 22.67 cents a pound. Soybean future closed down 1.00 cent to $9.58 a bushel.

Gold decreased $5.60 in New York trading to close at $944.80 per ounce, silver closed down $0.02 to $13.89 per ounce and copper for the front month delivery increased 0.70 cent to $2.778 per pound.

Dollar edged lower against euro to $1.423 and closed lower against the Japanese yen to 94.05.

Yield on 10-year U.S. bonds decreased to 3.45% and with 30-year maturities fell to 4.29%.