Weak Dollar Lifts Gold, Metals and Stocks

123jump.com Staff
08 Sep, 2009
New York City

Weak dollar prompted a rise in crude oil, gold and silver. Stocks edged higher on the back of resource stocks and Kraft offered $16.5 billion for Cadbury Plc. UK and German manufacturing advanced in July. Treasury auction of $38 billion of 3-year notes drew higher than average response.

[R]4:30 PM New York, 9:30 PM London, 6:30 AM Sydney – Weak dollar prompted a rise in crude oil, gold and silver. Stocks edged higher on the back of resource stocks and Kraft offered $16.5 billion for Cadbury Plc. UK and German manufacturing advanced in July.[/R]

A surge in commodities prices and merger activities lifted stocks higher but weak dollar fanned the fears of inflation. Dollar closed to the lowest level against euro for the year and edged lower against the yen and pound. Gold traded at six months high and silver at 13-month high.

Gold miners scaled higher after gold crossed $1,000 price and silver traded at 13-month high above $16 an ounce. Allegheny Technologies gained after it signed ten year contract with Rolls Royce. Kraft declined after it offered $16.5 billion for Cadbury Plc. Odyssey Re surged on unsolicited offer.

German industrial output declined 0.9% in July but exports increased 2.3% to €68.4 billion, third monthly increase. Air France-KLM traffic falls in August but passenger yield improve on tighter capacity. Alstom wins €140 million tramway project in Brazil.

Deutsche Telekom and France Telecom joint venture will lead the UK market in mobile subscribers. The merged company hopes that combining operations will lower network maintenance costs and keep customers loyal to their services.

UK stocks edged higher after commodities prices increased and UK manufacturing index suggested a sharp gain in July. Deutsche Telekom and France Telecom agreed to form merge operations to form the largest mobile phone service provider in UK. Miners jumped on a rise in copper, gold and silver prices.

The $16.5 billion bid from Kraft for Cadbury Plc may attract other suitors and analysts are speculating that Nestle or Hershey may bid for the chocolate maker.

Stocks in India edged higher after foreign investors add to holdings and gold surged above $1,000 mark. Merger activities and steady announcements of corporate financing to fund business expansion have sustained investor momentum.

North American Markets

Dow Jones Industrial Average increased 56.07 or 0.6% to a close of 9,497.34, S&P 500 Index added 8.99 or 0.9% to 1,025.39, and Nasdaq Composite Index advanced 18.99 or 0.9% to close at 2,037.78. Toronto TSX Composite Index increased 87.83 or 0.8% to 11,105.30.

Of the stocks in S&P 500 index, 367 increased, 129 declined and 4 were unchanged.

American International Group, Inc led the decliners in the S&P 500 index with a loss of 10.5% followed by losses in McGraw Hill of 7.2%, in Kraft Foods Inc of 5.8%, in WellPoint Incorporated of 4.3%, in Zions Bancorp of 4% and in MEMC Electric Material of 3.7%.

AMD led gainers in the S&P 500 index with a rise of 14.6% followed by gains in Harley Davidson 7.4%, in Allegheny Tech of 7.4%, in E*Trade Financial of 6.5% and in Peabody Energy of 6%.

South American Markets Indexes

Mexico Bolsa Index increased 605.57 or 2.1% to 29,190.82 Brazil Bovespa Stock Index increased 1,202.52 or 2.1% to 57,854.80.

Argentina Merval Index closed up 2.4% and Chile Stock Market Select index edged higher 0.3%, Peru Lima General Index edged up 1.3% and Colombia IGBC General Index increased 1.8%.

Europe Markets Review

In London FTSE 100 Index closed higher 14.16 or 0.29% to 4,947.34, in Paris CAC 40 Index increased 8.13 or 0.22% to close at 3,660.96, in Frankfurt DAX index higher 18.22 or 0.33% to close at 5,481.73. In Zurich trading SMI increased 12.75 or 0.21% to close at 6,194.72.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 72.29 or 0.70% to 10,393.23, Hang Seng index in Hong Kong increased 440.50 or 2.14% to 21,069.81 and CSI 300 index in China higher 66.76 or 2.15% to 3,170.97. ASX 200 index in Australia increased 69.40 or 1.56% to 4,523.80. The FTSE Bursa KL Composite index in Malaysia closed higher 11.68 or 0.98% to 1,202.07.

The Kospi Index in South Korea increased 11.12 or 0.69% to close at 1,619.69. SET index in Thailand closed higher 9.16 or 1.34% to 691.73 and JSE Index in Indonesia increased 30.91 or 1.32% to 2,371.30. The Sensex index in India increased 107.35 or 0.67% to 16,123.67.

Commodities, Metals, and Currencies

Crude oil increased $3.08 to $71.10 a barrel for a front month contract, natural gas edged up 8 cents to $2.81 per mBtu and gasoline increased 5.26 cents to 182.89 cents.

Wheat futures closed down 12.75 cents in Chicago trading to $4.59 a bushel. Sugar edged down to 0.73 cents a pound to 20.87 cents. Soybean future closed up 14.50 cent to $9.36 a bushel.

Gold increased $3.10 in New York trading to close at $999.80 per ounce, silver closed up $0.23 to $16.51 per ounce and copper for the front month delivery increased 8.90 cent to $2.95 per pound.

Dollar edged lower against euro to $1.448 and closed lower against the Japanese yen to 92.31.

Yield on 10-year U.S. bonds increased at 3.48% and with 30-year maturities edged higher to 4.32%.