U.S. and Global Markets Rebound

123jump.com Staff
01 Dec, 2009
New York City

U.S. stocks, crude oil and gold gained in the early trading in New York. Global markets recover from the last week of losses as the fears of Dubai led contagion recede. Gold surged as much as 1.5% to trade near $1,200 an ounce. Manufacturing in China expands but in UK and Russia falter.

[R]9:45 AM New York – U.S. stocks, crude oil and gold gained in the early trading in New York. Global markets recover from the last week of losses as the fears of Dubai led contagion recede. Gold surged as much as 1.5% to trade near $1,200 an ounce. Manufacturing in China expands but in UK and Russia falter.[/R]

U.S. stocks rebounded for the second day in a row after investors fears of Dubai led financial contagion receded. Crude oil increased 1.6% and gold recovered $12.10 to trade at $1,194 an ounce.

Global markets rebounded after Dubai World initiated talks to restructure only half of $59 billion of loans. Investors’ fears of wider contagion involving Russia, Ireland and Greece for now are receding.

Dubai World said that restructuring talks with lenders are “constructive” and is seeking to delay the repayment of $26 billion of loans. For now there appears to be no talks to reduce the debt burden and at least nine lenders are involved in direct talks.

Even though markets in Europe and Asia recovered as the prospect of wider contagion do not appear likely but the markets in Dubai and Qatar dropped.

Dubai Financial General Market Index dropped 5.6% and Qatar DSM 20 Index plunged 8.3% on its first day of trading after the announcement of debt talks last week.

Markets in Japan, Hong Kong and India rebounded as local investors surmised that debt exposure to Dubai construction project is contained and not likely to spread.

The benchmark indexes in Japan increased 2.4%, in Hong Kong gained 1.3% and in India added 1.6%.

Australia lifted its key lending rate for the third time in as many months and the Reserve Bank of Australia cited strong economic recovery in Asia. The overnight cash target rate was increased 25 basis points to 3.75%. The next meeting to decide the rate is scheduled in February of 2010 and rates are likely to stay on hold at the time.

Australian dollar gained in the morning but closed lower at 91.33 U.S. cents.

The private survey of Chinese manufacturing showed a speedier growth in November. The purchasing managers’ index in November increased to 55.7 from 55.4

However, the manufacturing index in Russia in November declined and the index in UK decreased to 51.8 in the month from 53.7 in October.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 226.65 or 2.43% to 9,572.20, and Hang Seng index in Hong Kong increased 291.65 or 1.34% to 22,113.15, and CSI 300 index in China higher 49.16 or 1.40% to 3,560.83. ASX 200 index in Australia increased 17.70 or 0.38% to 4,719.00 The FTSE Bursa KL Composite index in Malaysia was higher 7.60 or 0.60% to 1,266.71.

The Kospi Index in South Korea increased 14.12 or 0.91% to close at 1,569.72. SET index in Thailand closed higher 20.94 or 3.04% to 710.01. JSE Index in Indonesia increased 36.66 or 1.52% to 2,452.50. The Sensex index in India increased 272.05 or 1.61% to 17,198.27.

Europe Markets Review

In London FTSE 100 Index traded higher 78.28 or 1.51% to 5,268.96, in Paris CAC 40 Index increased 68.20 or 1.85% to 3,748.35 and in Frankfurt DAX index traded higher 102.15 or 1.82% to 5,728.10. In Zurich trading SMI increased 102.87 or 1.64% to 6,363.82.