U.S. Stocks Up; Dubai World in $26 B Loans Talks

Mukesh Buch
01 Dec, 2009
New York City

U.S. stocks closed higher and European markets lost early gains. Dubai World sought loan restructuring on only half of the loans of $59 billion. Gold and other metals closed higher. Crude oil rebounded. The second quarter GDP in India grew at 7.9%.

[R]4:30 PM New York, 9:30 PM London, 8:30 AM Sydney – U.S. stocks closed higher and European markets lost early gains. Dubai World sough loan restructuring on only half the loans of $59 billion. Gold and other metals closed higher. Crude oil rallies. The second quarter GDP in India grew at 7.9%.[/R]

U.S. stocks traded volatile but closed higher after Dubai government officials requested lenders to work with Dubai World to restructure loans. The benchmark indexes in UAE dropped more than 7%. Talks of regional bailout in the Middle East gain momentum.

After the close Dubai World said that talks with banks are “constructive” to renegotiate the loan terms for $26 billion of the $59 billion. Investors were encouraged after Dubai World sought loan restructuring on only less than half the loans.

Ratings revisions lifted Abercrombie & Fitch, Deer & Company, Nucor and Supervalu. AIG dropped 7.4% after Sanford C. Bernstein & Co lowered it price target by 40% to $12. CSG Systems increased 8%. Apparel retailers edged lower on lukewarm retail sales on the first day of Christmas holiday period.

Financial markets in Middle East dropped after Dubai government clarified that lenders should restructure loans to Dubai World and not wait for the government assistance. Markets in Dubai and Abu Dhabi fell more than 7%. DP World dropped 15% and Emmar Properties declined 10%.

UK banks led the decliners in trading on Dubai worries. The banks in UK have lent at least 80% loans to Dubai World, controlled by Dubai government. Royal Bank of Scotland, Lloyds Banking and Standard Chartered Bank fell more than 2.5%.

Deutsche Boerse refused to increase the bid for the Warsaw Stock Exchange. MAN SE dropped 4% on the worries that illegal payment investigation may cost as much as €300 million.

India’s economy in the quarter ending in September increased at 7.9% from a year ago. The faster than expected growth lifted stocks and rupee edged higher. Tata Motors swung to a small net profit on higher sales and lower operating costs.

North American Markets

Dow Jones Industrial Average increased 34.92 or 0.4% to a close of 10,344.84, S&P 500 Index edged higher 4.14 or 0.4% to 1,095.63, and Nasdaq Composite Index added 6.16 or 0.3% to close at 2,144.60. Toronto TSX Composite Index decreased 17.21 or 0.2% to 11,447.20.

Of the stocks in S&P 500 index, 268 increased, 267 declined and 5 were unchanged.

AIG led the decliners in the S&P 500 index with a loss of 14.7% followed by losses in Tenet Healthcare of 8.1%, in McAfee Inc of 4.4%, in Gannett Company 4.2% and in Supervalu Inc of 4.1%.

Huntington Bancorp led gainers in the S&P 500 index with a rise of 6.4% followed by gains in Marshall & Ilsley of 5.9%, in CB Richard Ellis of 5.6% and in Vornado Realty Trust of 5.5%.

South American Markets Indexes

Mexico Bolsa Index increased 181.66 or 0.6% to 30,957.11 and Brazil Bovespa Stock Index fell 37.71 or 0.06% to 67,044.44.

Argentina Merval Index decreased 1.9% and Chile Stock Market Select index added 1% and Colombia IGBC General Index decreased 0.9% and in Peru Lima General Index decreased 1.2%.

Europe Markets Review

In London FTSE 100 Index closed lower 55.05 or 1.05% to 5,190.68, in Paris CAC 40 Index decreased 41.30 or 1.11% to close at 3,680.15, in Frankfurt DAX index lower 59.66 or 1.05% to close at 5,625.95. In Zurich trading SMI decreased 75.71 or 1.19% to close at 6,260.95.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 264.03 or 2.91% to 9,345.55, and Hang Seng index in Hong Kong increased 687.00 or 3.25% to 21,821.50, and CSI 300 index in China higher 129.16 or 3.82% to 3,511.67. ASX 200 index in Australia increased 129.20 or 2.83% to 4,701.30 The FTSE Bursa KL Composite index in Malaysia was lower 11.50 or 0.91% to 1,259.11.

The Kospi Index in South Korea increased 31.10 or 2.04% to close at 1,555.60. SET index in Thailand closed higher 8.70 or 1.28% to 689.07. JSE Index in Indonesia increased 22.32 or 0.93% to 2,415.84. The Sensex index in India increased 294.21 or 1.77% to 16,926.22.

Commodities, Metals, and Currencies

Crude oil increased $1.23 to $77.28 a barrel for a front month contract, natural gas edged decreased 34 cents to $4.85 per mBtu and gasoline increased 5.67 cents to 201.15 cents.

Soybean future closed up 7.50 cents to $10.60 a bushel. Wheat futures closed up 19 cents in Chicago trading to $5.88 a bushel. Sugar closed lower 0.13 cent 22.64 cents.

Gold increased $6.80 in New York trading to close at $1,182.30 per ounce, silver closed up $0.19 to $18.52 per ounce and copper for the front month delivery increased 5.15 cent to $3.17 per pound.

Dollar closed lower against euro to $1.500 and edged lower against the Japanese yen to 86.31.

Yield on 10-year U.S. bonds decreased to 3.20% and with 30-year maturities closed down at 4.19%.