World Markets Rally on G-20 Statement

Mukesh Buch
09 Nov, 2009
New York City

World markets advance after G-20 left stimulus in place after a meeting. The group of wealthy and developing nations focused on the strategies to revive growth. The dollar fell after the statement and copper and gold advanced.

[R]9:00 AM New York – World markets advance after G-20 left stimulus in place after a meeting. The group of wealthy and developing nations focused on the strategies to revive growth. The dollar fell after the statement and copper and gold advanced.[/R]

Group of 20 nations agreed to keep stimulus in place and was silent on the fate of the dollar. At a meeting in Scotland the group pledged to provide support to the economies until the world economy is on the sound footing.

World stocks surged, commodities gained and the dollar weakened further.

The dollar has now become the new anchor currency for carry trade that arbitrages the interest rates earned on different currency denominated debts.

The dollar fell to $1.5011 against the euro and gold surged 1% to 1,106.90 an ounce.

Markets in emerging countries and Europe and Asia surged after the meeting. Indexes in Shanghai and Australia gained 1.7%, in India, Thailand, Poland and Turkey surged 2.1% and in Hungary soared 3.1%.

The benchmark indexes in London, Paris and Frankfurt increased more than 1.4%.

U.S. Treasuries declined as the U.S. is scheduled to sell $81 billion of debt this week. The Treasury auction plans to raise $40 billion of 3-year notes today, $25 billion of 10-year bonds tomorrow and $16 billion of 30-year bonds on Thursday this week.

Crude oil futures headed higher after Hurricane Ida in the Gulf of Mexico threatens the oil installation. Futures increased $1.05 to $78.48 a barrel.

Earnings Review

Allianz SE, an integrated financial service provider said third quarter revenues rose 4.3% to €22.0 billion from €21.1 billion a year ago. Net profit in the quarter was €1.32 billion or €2.94 per diluted share compared to net loss of €2.02 billion or €4.49 per share a year ago.

Parmalat SpA, the dairy group said nine months revenues fell 1% to €2.85 billion from €2.88 billion a year ago. Net profit for the nine months fell 55.6% to €283.4 million or €0.16 per diluted share compared to €638.0 million or €0.37 per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 19.64 or 0.20% to 9,808.99, and Hang Seng index in Hong Kong increased 377.83 or 1.73% to 22,207.55, and CSI 300 index in China higher 12.77 or 0.37% to 3,495.79. ASX 200 index in Australia increased 80.90 or 1.76% to 4,674.90. The FTSE Bursa KL Composite index in Malaysia was higher 6.99 or 0.55% to 1,267.75.

The Kospi Index in South Korea increased 4.33 or 0.28% to close at 1,576.79. SET index in Thailand closed higher 14.85 or 2.13% to 713.48. JSE Index in Indonesia increased 11.33 or 0.47% to 2,406.43. The Sensex Index in India increased 340.44 or 2.11% to 16,498.72.

Europe Markets Review

In London FTSE 100 Index traded higher 62.19 or 1.21% to 5,204.91, in Paris CAC 40 Index increased 50.96 or 1.37% to 3,758.25 and in Frankfurt DAX index traded higher 78.84 or 1.44% to 5,567.09. In Zurich trading SMI increased 68.18 or 1.08% to 6,361.79.