Record High in Gold; Dollar Drops

Mukesh Buch
06 Oct, 2009
New York City

U.S. stocks edged higher as talks of earnings drove investor sentiment. Gold closed at a record high and is in its ninth annual gain in a row since 2001 when it traded near $275. Silver, copper and natural gas advanced too.

[R]4:30 PM New York, 9:30 PM London, 6:30 AM Sydney – U.S. stocks edged higher as talks of earnings drove investor sentiment. Gold closed at a record high and is in its ninth annual gain in a row since 2001 when it traded near $275. Silver, copper and natural gas advanced too.[/R]

Stocks in New York trading gained as investors take optimistic ahead of third quarter earnings season. The dollar fell and gold gained to a record high of $1,045 surpassing its previous high of $1,033.90 in March. Gold has closed higher for eight years in a row and is likely to register its ninth annual rise since January 2001 when it around $275 an ounce.

U.S. stocks gained after commodities prices gained and investors anticipated higher earnings in the third quarter. Third quarter earnings at S&P 500 index companies are expected to increase at least 22% from a year ago according to the estimates provided by Ticker.com.

Avocent Corp surged 20% after it agreed to be acquired by Emerson Electric for $25 a share or $1.2 billion. St. Jude Medical dropped 11% after it lowered its adjusted third quarter earnings outlook. The Mosaic Co first quarter profit falls to $100.6 million. Pepsi Bottling quarterly net rises.

European markets traded higher following the rise in New York markets. Banks in Germany closed higher with Commerzbank and Deutsche Bank leading the gainers. Bilfinger Berger agreed to acquire Austria based MCE Beteiligungs for €350 million.

London stocks tracked the rise in commodities as copper and gold regained their momentum. Tesco Plc first half revenues increased 8.2%. Northern Foods declined after total sales in the first half were flat and the comparable sales in the period gained less than expected.

Tesco sales in the first half increased 8.3% to £30.4 billion and net increased 2% to £1.03 billion. Net income in Asia increased on the acquisition in South Korea. UK based stores comparable sales increased 3.7%.

Recent stock advance in Mumbai may not survive if Reserve Bank of India acts to increase interest rate as inflation runs high. The RBI Governor Rao sounded hawkish as consumer and wholesale prices continue to rise. Weak monsoon is likely to add more inflationary pressure.

North American Markets

Dow Jones Industrial Average increased 131.50 or 1.4% to a close of 9,731.25, S&P 500 Index added 14.26 or 1.4% to 1,054.72, and Nasdaq Composite Index added 35.42 or 1.7% to close at 2,103.57. Toronto TSX Composite Index increased 145.35 or 1.3% to 11,247.97.

Of the stocks in S&P 500 index, 424 increased, 70 declined and 6 was unchanged.

St Jude Medical led the decliners in the S&P 500 index with a loss of 12.7% followed by losses in Ciena Corporation of 7.9%, in Dynegy Inc of 4.8%, in Prologis of 3.2% and in Marshall & Ilsley of 1.2%.

Hartford Financial led gainers in the S&P 500 index with a rise of 7.9% followed by gains in Newmont Mining Corporation 7%, in Office Depot Inc of 6.6% and in Anadarko Petroleum of 6.1%.

South American Markets Indexes

Mexico Bolsa Index increased 476.08 or 1.6% to 29,690.48 and Brazil Bovespa Stock Index increased 301.29 or 0.5% to 62,670.59.

Argentina Merval Index closed up 2.4% and Chile Stock Market Select index added 0.8%, Peru Lima General Index edged up 2% and Colombia IGBC General Index increased 1.1%.

Europe Markets Review

In London FTSE 100 Index closed higher 113.65 or 2.26% to 5,137.98, in Paris CAC 40 Index increased 95.20 or 2.59% to close at 3,770.21, in Frankfurt DAX index higher 148.79 or 2.70% to close at 5,657.64. In Zurich trading SMI increased 114.26 or 1.85% to close at 6,277.16.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 17.31 or 0.18% to 9,691.80, Hang Seng index in Hong Kong increased 382.46 or 1.87% to 20,811.53, ASX 200 index in Australia increased 18.30 or 0.40% to 4,591.60. The FTSE Bursa KL Composite index in Malaysia was lower 3.72 or 0.31% to 1,212.73. CSI 300 index in China were closed today.

The Kospi Index in South Korea decreased 8.46 or 0.56% to close at 1,598.44 SET index in Thailand closed higher 12.92 or 1.80% to 731.39. JSE Index in Indonesia increased 47.73 or 1.92% to 2,528.15. The Sensex index in India increased 92.13 or 0.55% to 16,958.54.

Commodities, Metals, and Currencies

Crude oil increased $0.47 to $70.88 a barrel for a front month contract, natural gas edged down 11 cents to $4.88 per mBtu and gasoline increased 1.88 cents to 177.27 cents.

Soybean future closed up 25 cents to $9.10 a bushel. Wheat futures closed up 17.50 cents in Chicago trading to $4.60 a bushel. Sugar edged down 0.19 cents a pound to 24.00 cents.

Gold increased $21.90 in New York trading to close at $1,039.70 per ounce, silver closed up $0.76 to $17.29 per ounce and copper for the front month delivery increased 5.8 cent to $2.78 per pound.

Dollar edged lower against euro to $1.472 and closed lower against the Japanese yen to 88.76.

Yield on 10-year U.S. bonds increased to 3.26% and with 30-year maturities advanced to 4.07%.