Dollar Declines, Oil, Gold, World Stocks Rise

Mukesh Buch
22 Sep, 2009
New York City

World markets advanced as Fed is set to announce its rate decision tomorrow and world leaders meet in two days. Commodities and crude oil prices increased as the dollar decreased to a new low for the year.

[R]4:30 PM New York, 9:30 PM London, 6:30 AM Sydney – World markets advanced as Fed is set to announce its rate decision tomorrow and world leaders meet in two days. Commodities and crude oil prices increased as the dollar decreased to a new low for the year.[/R]

U.S. stocks participated in a world market rally as commodities prices rise in Asia and Europe and brokers lift outlook for retailers and technology companies. The dollar firmed but traded near its low for the year lifting gold, copper and crude oil.

Student loan lenders declined after the U.S. House passed the bill to eliminate the private lenders and offer all student loans through the education department. SLM Corp, Apollo Group, ITT Educational Services and Corinthian Colleges declined more than 4%. Carnival and CarMax traded higher after earnings.

Fed is expected to leave its target interest rate range between zero and 0.25% and also leave most of the lending program unchanged. At some point the Fed’s direct lending program will have to be unwound as the economy strengthens.

In a recent opinion written by Chairman Bernanke suggested that using reverse repurchase arrangement may be one way to drain liquidity from the market. Though it is premature to drain the liquidity now, Fed may drain as much as $400 billion if economy regains its footing in the next one year.

UK stocks edged higher as investors showed willingness to buy stocks ahead of earnings next month. Cadbury asked Takeover Panel to request a formal bid from Kraft Foods or drop the merger plans. Mining stocks rallied as commodities and oil gain.

Accor announces the sale and leaseback of low end hotel properties to lower debt. HeidelbergCement raised €2.2 billion through a stock offering and plans to reschedule its €5 billion debt. Hermes sees difficult period in 2009. Wendel SA offer launch bond exchange plan.

The benchmark index in India advanced as Asia Development Bank lifted its economic growth target for India to 6%. Advance tax collection for the current quarter surged nearly doubled. Reliance Communications plans to list its infrastructure unit and raise as much as $1 billion.

North American Markets

Dow Jones Industrial Average increased 51.01 or 0.5% to a close of 9,829.87, S&P 500 Index added 7.00 or 0.7% to 1,071.66, and Nasdaq Composite Index increased 8.26 or 0.4% to close at 2,146.30. Toronto TSX Composite Index advanced 153.50 or 1.4% to 11,578.11.

Of the stocks in S&P 500 index, 320 increased, 175 declined and 5 were unchanged.

AIG led the decliners in the S&P 500 index with a loss of 5% followed by losses in Apollo Group of 4.1%, in Lowe’s Company Inc of 3.9%, in E*Trade Financial of 3.5% and in UnitedHealth Group Incorporated of 3.4%.

MBIA Inc led gainers in the S&P 500 index with a rise of 22% followed by gains in JDS Uniphase 8.5%, in Macy''s, Inc of 6.3%, in Wynn Resorts Ltd of 6.2% and Massey Energy Company of 6.1%.

South American Markets Indexes

Mexico Bolsa Index decreased 93.48 or 0.3% to 29,513.68 and Brazil Bovespa Stock Index increased 687.76 or 1.1% to 61,615.78.

Argentina Merval Index closed up 3.6% and Chile Stock Market Select index added 0.05%, Peru Lima General Index edged up 2.1% and Colombia IGBC General Index increased 0.6%.

Europe Markets Review

In London FTSE 100 Index closed higher 8.24 or 0.16% to 5,142.60, in Paris CAC 40 Index increased 11.36 or 0.30% to close at 3,823.52, in Frankfurt DAX index higher 40.73 or 0.72% to close at 5,709.38. In Zurich trading SMI increased 34.19 or 0.55% to close at 6,340.72.

Asian Markets Review

Hang Seng index in Hong Kong increased 228.29 or 1.06% to 21,701.14 and CSI 300 index in China closed lower 77.58 or 2.42% to 3,131.03. ASX 200 index in Australia decreased 13.70 or 0.29% to 4,663.70. The Nikkei 225 Index in Tokyo and The FTSE Bursa KL Composite index in Malaysia were closed today.

The Kospi Index in South Korea increased 23.38 or 1.38% to close at 1,718.88. SET index in Thailand closed higher 11.21 or 1.57% to 724.37. The Sensex index in India increased 145.13 or 0.87% to 16,886.43. JSE Index in Indonesia was closed today.

Commodities, Metals, and Currencies

Crude oil increased $1.91 to $71.84 a barrel for a front month contract, natural gas edged up 6 cents to $3.64 per mBtu and gasoline increased 3.46 cents to 178.60 cents.

Wheat futures closed down 0.25 cents in Chicago trading to $4.55 a bushel. Sugar edged up 0.39 cents a pound to 23.61 cents. Soybean future closed up 8.50 cents to $9.22 a bushel.

Gold increased $11.40 in New York trading to close at $1,016.30 per ounce, silver closed up $0.27 to $17.15 per ounce and copper for the front month delivery increased 5.85 cent to $2.86 per pound.

Dollar edged lower against euro to $1.479 and closed lower against the Japanese yen to 91.14.

Yield on 10-year U.S. bonds decreased to 3.44% and with 30-year maturities was increased to 4.19%.