Fed Sees Improving Economy; Metals Rise

Mukesh Buch
02 Dec, 2009
New York City

Beige Book survey indicated varying economic conditions across the U.S. and labor and commercial real estate markets remain weak. Gold surged to a new record. European finance ministers agree on a new financial regulatory framework.

[R]4:30 PM New York, 9:30 PM London, 8:30 AM Sydney – Beige Book survey indicated varying economic conditions across the U.S. and labor and commercial real estate markets remain weak. Gold surged to a new record. European finance ministers agree on a new financial regulatory framework.[/R]

Financial markets around the world traded higher for the third day in a row as investors expect a regional bailout of Dubai. Dubai is expected to delay payment on Islamic bonds of $3.4 billion and restructure $26 billion of bank debts. Gold surges to a new record.

U.S. stocks closed higher on a rally in resource sector after the Federal Reserve said that the economy is improving. Alcoa surged 6.5% but Cummins fell nearly 8% after it said it plans to cut 400 staff at its plant in New York in January.

The Beige Book survey released by the Fed said that eight regions in the country noted “some pickup in activity or improvement in conditions” and the other four regions showed mixed conditions or a little change.

A rally in commodities lifted trading sentiment in London stocks. Brewin Dolphin Holdings full-year net profit declines 29%. Numis Corp slips to a full-year net loss. Carillion secures £360 million construction management contract to revitalize Union Station in Toronto, Canada.

European markets closed higher as confidence returns in stocks. BMW Group November U.S. auto sales decreased 7.5%, Volkswagen sales increased 23.6% and Daimler AG sales increased 9.1%. Deutsche Boerse November trading volume fell 21% to €96.5 billion.

European Union finance ministers agreed after months of negotiations to a new financial oversight framework that will have three new agencies to supervise banking, insurance and securities and markets. The legislation will now be voted in the European Parliament.

Siemens AG announced a settlement with eleven one-time managers including two former chief executives. Two former chief executives Heinrich von Pierer between 1992 and 2005 will pay €5 million and chief executive between 2005 and 2007 Klaus Kleinfeld agreed to pay €2 million.

Bribery paid to win foreign contracts in Germany was deemed illegal in the late 1990s. Siemens has incurred a total cost $2.5 billion related to the scandal.

Stocks in India traded lower and global markets edged higher as confidence returns in the emerging markets. Auto sales in November surged from a year ago. Tata Motors, Maruti Suzuki India Ltd and Bajaj Auto gained. India plans to sell stakes in three power companies to raise as much as $3 billion.

North American Markets

Dow Jones Industrial Average decreased 18.90 or 0.2% to a close of 10,452.68, S&P 500 Index edged higher 0.38 or 0.03% to 1,109.24, and Nasdaq Composite Index added 9.22 or 0.4% to close at 2,185.03. Toronto TSX Composite Index increased 72.41 or 0.6% to 11,779.73.

Of the stocks in S&P 500 index, 313 increased, 176 declined and 11 were unchanged.

GameStop Corp led the decliners in the S&P 500 index with a loss of 8.3% followed by losses in Cummins Inc of 8% and in DR Horton, Inc of 3.7%, in Owens-Illinois Inc of 3.2% and in Morgan Stanley and Walgreen Co of 2.9%.

Alcoa Inc led gainers in the S&P 500 index with a rise of 6.6% followed by gains in CB Richard Ellis 5.8%, in CF Industries Holdings, Inc of 5.1% and in Micron Tech of 5%.

South American Markets Indexes

Mexico Bolsa Index increased 361.21 or 1.2% to 32,111.79 and Brazil Bovespa Stock Index increased 206.39 or 0.3% to 68,614.79.

Argentina Merval Index increased 0.5% and Chile Stock Market Select index added 0.6% and Colombia IGBC General Index increased 0.4% and in Peru Lima General Index increased 1%.

Europe Markets Review

In London FTSE 100 Index closed higher 15.22 or 0.29% to 5,327.39, in Paris CAC 40 Index increased 20.18 or 0.53% to close at 3,795.92, in Frankfurt DAX index higher 5.07 or 0.09% to close at 5,781.68. In Zurich trading SMI increased 14.46 or 0.23% to close at 6,386.54.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 36.74 or 0.38% to 9,608.94, and Hang Seng index in Hong Kong increased 176.42 or 0.80% to 22,289.57, and CSI 300 index in China higher 36.50 or 1.02% to 3,597.33. ASX 200 index in Australia increased 43.40 or 0.92% to 4,762.40 The FTSE Bursa KL Composite index in Malaysia was higher 4.44 or 0.35% to 1,271.15.

The Kospi Index in South Korea increased 21.91 or 1.40% to close at 1,591.63. SET index in Thailand closed lower 16.50 or 2.32% to 693.51. JSE Index in Indonesia increased 19.06 or 0.78% to 2,471.56. The Sensex index in India decreased 28.36 or 0.16% to 17,169.91.

Commodities, Metals, and Currencies

Crude oil decreased $1.88 to $76.49 a barrel for a front month contract, natural gas edged decreased 22 cents to $4.54 per mBtu and gasoline decreased 4.70 cents to 199.50 cents.

Soybean future closed down 25.50 cents to $10.34 a bushel. Wheat futures closed down 8 cents in Chicago trading to $5.76 a bushel. Sugar closed higher 0.38 cent 23.04 cents.

Gold increased $16.40 in New York trading to close at $1,216.60 per ounce, silver closed up $0.05 to $19.26 per ounce and copper for the front month delivery increased 2.90 cent to $3.26 per pound.

Dollar closed lower against euro to $1.504 and edged higher against the Japanese yen to 87.42.

Yield on 10-year U.S. bonds increased to 3.31% and with 30-year maturities closed down at 4.25%.