World Markets Rebound; Natural Gas Below $3

Mukesh Buch
20 Aug, 2009
New York City

World market indexes closed higher after indexes in Asia, North America and Europe rebounded. Commodities prices edged higher but natural gas dipped below $3 mBTU. World steel production fell at a slower pace in July. AIG surges on tough talk by the newly appointed chief. Sears reports wider loss.

[R]4:30 PM New York, 9:30 PM London, 6:30 AM Sydney – World market indexes closed higher after indexes in Asia, North America and Europe rebounded. Commodities prices edged higher but natural gas dipped below $3 mBTU. World steel production fell at a slower pace in July. AIG surges on tough talk by the newly appointed chief.[/R]

In New York trading, investors searched for a reason to buy. With the lackluster economic data from regional manufacturing activity in the Northeast and weak trading volume, rise in financials lifted market indexes. Citigroup, AIG, MBIA and E*Trade Financial swayed market close.

The newly appointed AIG surged after chief executive Benmosche vowed to rebuild the company and repay the government without saying how he will do it. According to the recording of a town hall meeting conducted the chief and obtained by Bloomberg News, Benmosche plans to sell assets at the right time and at the right price without the regulatory interference. Tough talk appears to be directed to rally employees.

The preliminary unemployment claims in the last week increased 15,000 from the revised claims in the previous week of 561,000. The employment was unchanged in the week at 4.7% matching the previous week rate.

Sears Holdings led the decliners in the S&P 500 index with a loss of 13.3%. Barnes & Noble declares quarterly cash dividend. Hot Topic second quarter beat estimates but offers weak outlook. Citi Trends lowers annual earnings outlook.

European indexes gained after a rebound in commodities. Air Berlin completed its €125 million bond offering. Holcim Ltd lifted its cost savings target to €600 million. German regulators raided Porsche offices to investigate securities laws violations. ThyssenKrupp sales fell 23%.

UK reported record budget deficit in July after revenues declined 15% and expenses surged 7.5%. The pound and gilt fell. Retail sales in July increased 3.3% from a year ago and edged higher 0.4% from June. Mortgage approvals increased. A jump in commodities prices lifted the benchmark index.

Stocks in Japan edged higher after commodities prices increased and Chinese stocks rebounded. Japan construction machinery association lowered its estimate for shipments. Auto and truck makers gained on brokerage recommendation.

The benchmark indexes in Shanghai and Hong Kong recovered after banks reported improving margins and higher net lending. Increase in commodities prices also lifted stocks of copper and coal miners. Hong Kong consumer prices declined 1.5% in July. China Mobile profit growth slows.

Mumbai stocks edged higher after revived monsoon rains lowered rain deficit in the northern region of India. Essar Oil is expected to start its natural gas production by the end of the year. Wholesale prices declined according to the latest read.

North American Markets

Dow Jones Industrial Average increased 70.89 or 0.8% to a close of 9,350.05, S&P 500 Index increased 10.91 or 1.1% to 1,007.37, and Nasdaq Composite Index edged higher 19.98 or 1.01% to close at 1,989.22. Toronto TSX Composite Index increased 13.68 or 0.1% to 10,700.51.

Of the stocks in S&P 500 index, 410 increased, 84 declined and 6 was unchanged.

Sears Holdings Corporation led the decliners in the S&P 500 index with a loss of 11.9% followed by losses in GameStop Corp of 7%, in NetApp, Inc of 5.9%, in Supervalu Inc of 2.4% and in Masco Corp of 1.9%.

American International Group, Inc led gainers in the S&P 500 index with a rise of 21.2% followed by gains in Citigroup Inc 8.5%, in JDS Uniphase of 8.1% and Kimco Realty of 7.4%.

South American Markets Indexes

Mexico Bolsa Index increased 345.87 or 1.2% to 27,944.24 Brazil Bovespa Stock Index added 675.20 or 1.2% to 56,831.48.

Argentina Merval Index increased 2.2%. Chile Stock Market Select index edged lower 0.5%, Peru Lima General Index edged higher 0.8% and Colombia IGBC General Index added 0.8%.

Europe Markets Review

In London FTSE 100 Index closed higher 66.91 or 1.4% to 4,756.58, in Paris CAC 40 Index increased 54.98 or 1.6% to close at 3,505.32 and in Frankfurt DAX index higher 79.08 or 1.5% to close at 5,311.06. In Zurich trading SMI increased 51.26 or 0.9% to close at 6,032.05.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 179.41 or 1.76% to 10,383.41, Hang Seng index in Hong Kong increased 374.63 or 1.88% to 20,328.86 and CSI 300 index in China higher 129.82 or 4.31% to 3,144.39. ASX 200 index in Australia increased 3.70 or 0.08% to 4,377.50. The FTSE Bursa KL Composite index in Malaysia closed higher 7.90 or 0.68% to 1,163.43.

The Kospi Index in South Korea increased 30.43 or 1.97% to close at 1,576.39. SET index in Thailand closed higher 9.70 or 1.54% to 640.98 and JSE Index in Indonesia increased 50.89 or 2.23% to 2,328.64. The Sensex index in India increased 202.68 or 1.37% to 15,012.32.

Commodities, Metals, and Currencies

Crude oil decreased $1.09 to close at $72.74 a barrel for a front month contract, natural gas decreased 8 cent to $2.94 per mBtu and gasoline decreased 4.96 cents to 198.50 cents.

Wheat futures closed up 3.00 cents in Chicago trading to $4.9650 a bushel. Sugar decreased 0.7 cent in trading at 21.97 cents a pound. Soybean future closed down 1.00 cent to $9.57 a bushel.

Gold decreased $2.90 in New York trading to close at $941.90 per ounce, silver closed up $0.05 to $13.96 per ounce and copper for the front month delivery decreased 1 cent to $2.76 per pound.

Dollar edged lower against euro to $1.425 and closed higher against the Japanese yen to 94.14.

Yield on 10-year U.S. bonds decreased to 3.42% and with 30-year maturities fell to 4.32%.