Global Contagion Worries Ebb; Record Gold

Mukesh Buch
01 Dec, 2009
New York City

U.S. stocks closed higher and crude oil and gold gained. Investors around the world shook off the Dubai worries after the prospect of global contagion ebb. Manufacturing in China accelerate, trade deficit in India decline and Australia raises rates for the third time in three months.

R]4:30 PM New York, 9:30 PM London, 8:30 AM Sydney – U.S. stocks closed higher and crude oil and gold gained. Investors around the world shook off the Dubai worries after the prospect of global contagion ebb. Manufacturing in China accelerate, trade deficit in India decline and Australia raises rates for the third time in three months.[/R]

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.

UK stocks rebounded for the second day in a row with confidence returning and commodities prices rising. UK banks have the largest exposure in the region. Xstrata Plc agreed to sell its stake in Indophil Resources NL to China based Zijin Mining Group. Green King Plc surged 5% on earnings.

European markets rebounded after Dubai World initiated debt restructuring talks. Deutsche Bank said its exposure to Dubai is manageable. Alstom S.A. and Schneider Electric SA enter into exclusive talks with AREVA for acquisition of Areva T&D. Vivendi agrees to sell its stake in NBC Universal to GE.

The benchmark index in Mumbai increased 1.6% as the global worries of wider contagion emanating from Dubai receded. Emerging markets and Asian markets gained. Exports in October fell 6.6% and imports declined 15%, but deficit remain close to $9 billion.

Reserve Bank of Australia increased rates to 3.75%, its third monthly increase in a row. Manufacturing activities eased in November and housing approvals dropped 0.6% in October which surprised many economists.

The private survey of Chinese manufacturing showed a speedier growth in November. However, the manufacturing index in Russia in November declined and the index in UK decreased in the month.

North American Markets

Dow Jones Industrial Average increased 126.74 or 1.2% to a close of 10,471.58, S&P 500 Index edged higher 13.23 or 1.2% to 1,108.86, and Nasdaq Composite Index added 31.21 or 1.5% to close at 2,175.81. Toronto TSX Composite Index increased 260.12 or 2.3% to 11,707.32.

Of the stocks in S&P 500 index, 439 increased, 55 declined and 6 were unchanged.

Bristol-Myer Squibb led the decliners in the S&P 500 index with a loss of 2.6% followed by losses in Sun Microsystems of 2.4% and in GameStop Corp of 2.4%.

AIG led gainers in the S&P 500 index with a rise of 8.6% followed by gains in Dynegy Inc 6.1%, in Limited Brands of 5.8% and in MBIA Inc of 5.8%.

South American Markets Indexes

Mexico Bolsa Index increased 793.47 or 2.6% to 31,750.58 and Brazil Bovespa Stock Index increased 1,363.96 or 2.1% to 68,408.40.

Argentina Merval Index increased 2.9% and Chile Stock Market Select index added 2.11% and Colombia IGBC General Index increased 1.2% and in Peru Lima General Index increased 1%.

Europe Markets Review

In London FTSE 100 Index closed higher 121.49 or 2.34% to 5,312.17, in Paris CAC 40 Index increased 95.59 or 2.60% to close at 3,775.74, in Frankfurt DAX index higher 150.66 or 2.68% to close at 5,776.61. In Zurich trading SMI increased 111.13 or 1.77% to close at 6,372.08.

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.

Commodities, Metals, and Currencies

Crude oil increased $0.59 to $77.87 a barrel for a front month contract, natural gas edged decreased 15 cents to $4.70 per mBtu and gasoline increased 1.40 cents to 202.55 cents.

Soybean future closed down 1.00 cents to $10.59 a bushel. Wheat futures closed down 4.75 cents in Chicago trading to $5.84 a bushel. Sugar closed higher 0.02 cent 22.66 cents.

Gold increased $14.80 in New York trading to close at $1,197.10 per ounce, silver closed up $0.61 to $19.13 per ounce and copper for the front month delivery increased 4.10 cent to $3.21 per pound.

Dollar closed lower against euro to $1.508 and edged higher against the Japanese yen to 86.71.

Yield on 10-year U.S. bonds increased to 3.28% and with 30-year maturities closed down at 4.27%.