U.S. Stocks Up; Central Banks Diversify

Mukesh Buch
25 Nov, 2009
New York City

The central banks around the world are looking to diversify their foreign reserve and increase their holdings of gold and currencies other than the U.S. dollar. Gold rallied to a new high and the Swiss franc traded at parity to the U.S. dollar. Vietnam devalued the dong by 5.2% and raised rates.

[R]4:30 PM New York, 9:30 PM London, 8:30 AM Sydney – The central banks around the world are looking to diversify their foreign reserve and increase their holdings of gold and currencies other than the U.S. dollar. Gold rallied to a new high and the Swiss franc traded at parity to the U.S. dollar.[/R]

Central banks around the world are looking for an alternative to the dollar. Gold closed at a record high after the Reserve Bank of India is expected to add more to its gold holding. Russia is also expected to increase its holding of Canadian dollar and diversify its foreign reserve assets. The Swiss franc gained to trade at a parity to the U.S. dollar for the first time in eighteen months.

U.S. stocks traded flat after the weekly jobless claims declined 35,000. October durable goods orders decreased 0.6% and personal income increased 0.2%. Single family new home sales increased 6.2% in the month. Gold trades at a record high.

U.S. Treasury sold $32 billion of 7-year bonds today that yielded 2.835% and completed $118 billion of bond auction this week.

UK stocks closed higher after the third quarter GDP estimates was revised to 0.3 shrink from 0.4% fall. London Stock Exchange Group first-half profit declines. Compass Group shares hit 7-year high as fiscal year net beats market view.

Banks in Europe were under pressure after the Bundesbank estimated additional losses of as much as €90 billion. Christian Dior announces 2009 interim dividend. Porsche plans to repay €11 billion debt after its merger with Volkswagen and reported a full-year loss of €2.52 billion

The State Bank of Vietnam lowered its benchmark rate for the dollar to 17,961 dong, a devaluation of 5.2% and narrowed the trading range to 3% from 5%. The bank also increased the discount rate to 6% from 5%.

North American Markets

Dow Jones Industrial Average increased 30.69 or 0.3% to a close of 10,464.40, S&P 500 Index edged higher 4.98 or 0.5% to 1,110.63, and Nasdaq Composite Index increased 6.87 or 0.3% to close at 2,176.05. Toronto TSX Composite Index increased 97.27 or 0.8% to 11,636.90.

Of the stocks in S&P 500 index, 375 increased, 113 declined and 12 was unchanged.

Mattel Inc led the decliners in the S&P 500 index with a loss of 2.6% followed by losses in Morgan Stanley of 2.2%, in Zions Bancorp of 2.0%, in Hershey Company of 2% and in Integrys Energy of 1.6%.

MBIA Inc led gainers in the S&P 500 index with a rise of 5.2% followed by gains in Limited Brands 5.2%, in Chesapeake Energy of 5.1% and in Tiffany & Company of 4.9%.

South American Markets Indexes

Mexico Bolsa Index increased 402.05 or 1.3% to 31,364.04 and Brazil Bovespa Stock Index added 600.08 or 0.9% to 67,917.08.

Argentina Merval Index increased 0.3% and Chile Stock Market Select index increased 0.1% and Colombia IGBC General Index increased 1.2% and in Peru Lima General Index increased 0.7%.

Europe Markets Review

In London FTSE 100 Index closed higher 40.85 or 0.77% to 5,364.81, in Paris CAC 40 Index increased 24.54 or 0.65% to close at 3,809.16, in Frankfurt DAX index higher 33.71 or 0.58% to close at 5,803.02. In Zurich trading SMI increased 24.67 or 0.39% to close at 6,422.20.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 40.06 or 0.43% to 9,441.64, and Hang Seng index in Hong Kong increased 188.66 or 0.84% to 22,611.80, and CSI 300 index in China higher 81.55 or 2.30% to 3,629.63. ASX 200 index in Australia increased 37.20 or 0.79% to 4,722.20. The FTSE Bursa KL Composite index in Malaysia was lower 1.09 or 0.09% to 1,271.00.

The Kospi Index in South Korea increased 5.46 or 0.34% to close at 1,611.88. SET index in Thailand closed higher 19.47 or 2.88% to 695.69. JSE Index in Indonesia decreased 10.36 or 0.42% to 2,461.53. The Sensex index in India increased 67.87 or 0.40% to 17,198.95.

Commodities, Metals, and Currencies

Crude oil increased $1.94 to $77.96 a barrel for a front month contract, natural gas edged increased 40 cents to $5.16 per mBtu and gasoline increased 5.30 cents to 199.25 cents.

Soybean future closed up 8.50 cents to $10.54 a bushel. Wheat futures closed increased 18 cents in Chicago trading to $5.71 a bushel. Sugar closed up 0.24 cent 22.32 cents.

Gold increased $26.60 in New York trading to close at $1,194.30 per ounce, silver closed up $0.39 to $18.88 per ounce and copper for the front month delivery increased 6.20 cent to $3.20 per pound.

Dollar closed down against euro to $1.52 and edged lower against the Japanese yen to 87.33.

Yield on 10-year U.S. bonds decreased to 3.27% and with 30-year maturities closed down at 4.23%.