Global Markets Overview 05/10/2011
US Stocks
U.S. stocks climbed Monday as commodity prices recovered from last week's slump and a burst of deal activity helped overshadow concerns over Greek finances.
The Dow Jones Industrial Average rose 45.94 points, or 0.36%, to 12684.68. Boosting the measure, McDonald's gained 61 cents, or 0.8%, to $79.31, after its same store sales rose 6% in April, the biggest monthly increase since October. Aluminum giant Alcoa was also strong, rising 38 cents, or 2.2%, to 17.53, as metals' prices climbed.
[Sign up here to get this report delivered to your inbox daily]
The Nasdaq Composite advanced 15.69, or 0.55%, to 2843.25. The Standard & Poor's 500-stock index gained 6.09, or 0.45%, to 1346.29, led by its energy sector. Helping boost energy stocks, commodity prices rose after plunging sharply last week.
Crude-oil prices settled above $102 a barrel. Chevron gained 1.21, or 1.2%, to 104.09, while Exxon Mobil added 49 cents, or 0.6%, to 83.18. Deal activity helped shore up investor sentiment Monday.
Dollar Thrifty shares rallied 9.58, or 14%, to 79.27, after Hertz Global Holdings offered to buy the car-rental company in a deal valued at $2.36 billion in cash and stock.Shares of Hertz slipped 17 cents, or 1%, to 16.68. Biotechnology company Alkermes climbed 72 cents, or 5%, to 15.19, after saying it would buy a drug-technology unit of Irish drug maker Elan in a cash-and-stock deal valued at $960 million.
European Markets
European stock markets declined Monday, led by a fall in financial shares, as concerns mounted over Greece's debt burden and as Standard & Poor's cut the country's credit rating. The downgrade, which came in the early afternoon, sent Greece's ASE Composite index down 1.5% to 1,349.9.
Other peripheral markets also fell as investors mulled which country might need a bailout next. Spain's Ibex 35 lost 2% and Italy's FTSE MIB dropped 1.3%. S&P said it lowered its long- and short term ratings on Greece to B and C respectively, from BB- and B previously, because of concerns that euro-zone officials are looking to extend the debt payment maturities of the European Commission's portion of the nation's EUR110 billion bailout. The resurfacing of euro-zone debt concerns weighed on the Stoxx Europe 600 index, which closed down 0.3% at 280.43.
Throughout Europe, financial shares slumped. Among the sharpest losers were National Bank of Greece, down 4.1%, and Spain's BBVA SA, down 3%. The sector also weakened in France, where Societe Generale SA lost 2.6% and BNP Paribas SA 2.7%, sending the CAC 40 index down 1.3% to 4,007.26. In Germany, where Commerzbank AG slumped 3.2%, the DAX 30 index dropped 1.1% to 7,410.52. A 1.7% decline for Munich Re added pressure to the index. The reinsurer swung to a first-quarter loss of EUR947 million.
[Sign up here to get this report delivered to your inbox daily]
In the U.K, banking stocks were in focus too, but for other reasons. Shares of Barclays PLC fell 1.3% after the bank followed in Lloyds Banking Group PLC's footsteps and said it will take a GBP1 billion provision in the second quarter to compensate customers for mis-selling payment protection insurance. HSBC Holdings PLC declined 0.5% after the group took a $440 million provision for the same reason. The FTSE 100 index closed down 0.6% at 5,942.69.
Asian Markets
Asian shares ended mostly higher Monday, cheering strong U.S. jobs data and a rebound in commodity prices, with Hong Kong stocks climbing after an eight-session losing streak as investors snapped up beaten up property and resource shares. The region's broad gains were tempered by caution over the euro zone's sovereign debt troubles, with analysts also flagging worries about the economic growth.
Hong Kong's Hang Seng Index rose 0.8% to 23,336.00, China's Shanghai Composite Index gained 0.3% to 2,872.46, and Taiwan's Taiex climbed 0.7% to 9,035.48. Singapore's Straits Times Index jumped 1.2% to 3,136.94, after the ruling People's Action Party remained in power with an overwhelming majority despite winning the lowest proportion of popular vote since the nation's independence in 1965.
Neptune Orient Lines Ltd. rose 4.9% and DBS Group Holdings Ltd. added 2.1%. Bucking the positive trend, Japan's Nikkei Stock Average fell 0.7% to 9,794.38, undermined by concerns about potential power shortages. Worries that the Bank of Korea might raise interest rates again this week weighed on stocks in Seoul, sending the Kospi 0.4% lower to 2,139.17. Several resource stocks bounced as Nymex crude-oil prices edged back closer to $100 a barrel and as silver led precious metals higher. Inpex Corp. rose 1.6% in a downbeat Tokyo market, while Cnooc Ltd. and PetroChina Co. rose 1.8% and1.7%, respectively, in Hong Kong.
Base Metals
Base metals closed mostly higher on the London Metal Exchange Monday as a soft dollar and bargain-hunting by investors spurred a rebound across the markets. The metals also found key support from the re-emergence of physical buying in China, the world's largest metals consumer, with buyers keen to take advantage of lower market prices.
LME three month copper, which had earlier peaked just below the $9,000 a metric ton mark, at $8,970/ton, closed up 0.7% on Friday's PM kerb at $8,890/ton. LME three month lead, which had pushed as high as $2,375/ton, closed up 0.9% at $2,300/ton. Oil futures clawed back some of the ground lost last week, pulled higher after heavy flooding and problems at a Mississippi refinery triggered a surge in gasoline prices.
Light, sweet crude for June delivery settled up $5.37, or 5.5%, at $102.55 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled up $6.77, or 6.2%, at $115.90 a barrel. A resurgence of worry about euro-zone sovereign debt pushed gold back above $1,500 and added to silver's recovery after last week's selloff provided what some saw as potential bargains. Concerns about the global economic recovery were heightened after Standard & Poor's downgraded Greece's credit rating by two notches and Moody's placed the debt on review for a possible downgrade. That boosted the allure of the precious metals as refuges during times of economic uncertainty.
The most actively traded gold contract, for June delivery, rose $11.60, or 0.8%, to settle at $1,503.20 a troy ounce on the Comex division of the New York Mercantile Exchange. Nearby May gold added $11.70, or 0.8%, to $1,502.90. Comex July silver gained $1.829, or 5.2%, to settle at $37.116 a troy ounce, while the nearby May contract rose $1.827, or 5.2%, to $37.110.
More from IBT Markets:
Newsletter: To receive Global Markets update, sign up here