Global Markets Settle; Jobless Recovery

Mukesh Buch
18 Sep, 2009
New York City

U.S. stocks advanced as dollar traded near recent lows and gold, silver, copper and crude oil declined. Consumer stocks and cyclical led the gainers in weak trading. Michigan led the nation in August with unemployment rate of 15.2%. UK deficit in August soars and euro-dollar bonds issuance rises.

[R]4:30 PM New York, 9:30 PM London, 6:30 AM Sydney – U.S. stocks advanced as dollar traded near recent lows and gold, silver, copper and crude oil declined. Consumer stocks and cyclical led the gainers in weak trading. Michigan led the nation in August with unemployment rate of 15.2%. UK deficit in August soars and euro-dollar bonds issuance rises.[/R]

U.S. stocks extended the gains as world leaders prepare to meet next week and bankers haggle with regulators to determine pay cuts. Commodities edged lower and consumer stocks increased as investors sought safety from stretched valuations.

Two groups of investors are driving trading sentiment for the last five weeks. The group that has dominated in the last six months believes that the economic rebound is well on its way and markets are still lagging the economy and the second group that believes while the economic decline has abetted and stabilized but markets are ahead of fundamentals.

With the earnings season only 20 days away, investors are jockeying for the companies in the economic sensitive areas.

Michigan led the unemployment across the nation in August with 15.2% followed by Nevada 13.2% rate and California 12.2%. The sharp decline in auto sales has devastated manufacturing jobs in the mid-west.

Of all the states, 27 states showed an increase in unemployment and the number of states with at least 10% rate decreased to 14. The national unemployment increased to 9.7% in August, up 0.3 percentage point from July and 3.5 points from August 2008.

Nevada, California and Rhode Island reported record monthly rates since the data collection began in 1976. Over the year, Michigan led the increase in unemployment followed by Nevada, Oregon and Alabama.

Huntington Bancshares dropped more than 10% after it completed secondary offering. Agriculture machinery makers declined. Canada based InterOil surged after it discovered natural gas field at lower than previously estimated depth in Papua New Guinea.

European government issued dollar denominated bonds as dollar weakens. The weekly issuance surged this week to $21.7 billion. German producer prices in August increased 0.5% on the rise in energy costs. Total SA workers threaten strike ahead of refinery capacity closure in France.

The pound fell and is likely to trade weak as UK struggles with rising cost of bank bailout and falling tax receipts. UK government debt surged to 57.5% of GDP and is likely to surpass 60% by the end of fiscal 2010.

Stocks in India edged higher but barely. Infrastructure companies lead the gainers as more power plant orders are awarded. Raymond Limited, the textile conglomerate plans to develop housing complex in north Mumbai.

North American Markets

Dow Jones Industrial Average increased 36.28 or 0.4% to a close of 9,820.20, S&P 500 Index decreased 2.81 or 0.3% to 1,068.30, and Nasdaq Composite Index increased 6.11 or 0.3% to close at 2,132.86. Toronto TSX Composite Index declined 82.28 or 0.7% to 11,445.95.

Of the stocks in S&P 500 index, 292 increased, 201 declined and 7 was unchanged.

Eastman Kodak led the decliners in the S&P 500 index with a loss of 6.6% followed by losses in Coventry Health of 5.6%, in Vulcan Materials of 4.1%, in International Paper of 4% and in Citigroup Inc of 3.6%.

Sprint Nextel Company led gainers in the S&P 500 index with a rise of 9.7% followed by gains in E*Trade Financial Corporation 8.2%, in Baker Hughes Inc of 7.9% and in Harman International of 7.2%.

South American Markets Indexes

Mexico Bolsa Index decreased 75.72 or 0.3% to 29,942.00 and Brazil Bovespa Stock Index decreased 466.98 or 0.8% to 60,703.01.

Argentina Merval Index closed down 0.5% and Chile Stock Market Select index edged higher 0.8%, Peru Lima General Index edged up 1.2% and Colombia IGBC General Index increased 1.4%.

Europe Markets Review

In London FTSE 100 Index closed higher 8.94 or 0.17% to 5,172.89, in Paris CAC 40 Index decreased 7.43 or 0.19% to close at 3,827.84, in Frankfurt DAX index lower 27.31 or 0.48% to close at 5,703.83. In Zurich trading SMI increased 7.43 or 0.12% to close at 6,325.15.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 73.26 or 0.70% to 10,370.54, Hang Seng index in Hong Kong decreased 145.06 or 0.67% to 21,623.45 and CSI 300 index in China lower 120.41 or 3.63% to 3,199.69. ASX 200 index in Australia decreased 21.70 or 0.46% to 4,693.20. The FTSE Bursa KL Composite index in Malaysia closed higher 2.40 or 0.20% to 1,221.20.

The Kospi Index in South Korea increased 4.24 or 0.25% to close at 1,699.71. SET index in Thailand closed higher 4.44 or 0.63% to 713.67 and JSE Index in Indonesia increased 17.63 or 0.72% to 2,456.99. The Sensex index in India increased 30.19 or 0.18% to 16,741.30.

Commodities, Metals, and Currencies

Crude oil decreased $0.72 to $71.75 a barrel for a front month contract, natural gas edged up 30 cents to $3.76 per mBtu and gasoline decreased 2.51 cents to 182.61 cents.

Wheat futures closed down 4.50 cents in Chicago trading to $4.57 a bushel. Sugar edged down to 0.69 cents a pound to 23.24 cents. Soybean future closed down 12 cents to $9.41 a bushel.

Gold decreased $5.50 in New York trading to close at $1,008.00 per ounce, silver closed down $0.25 to $17.01 per ounce and copper for the front month delivery decreased 10.85 cent to $2.78 per pound.

Dollar edged higher against euro to $1.4703 and closed higher against the Japanese yen to 91.44.

Yield on 10-year U.S. bonds increased to 3.47% and with 30-year maturities was increased to 4.22%.