Global Markets Overview 06/01/2011
US Markets
U.S. stocks finished the day's session and May on a buoyant note, shrugging off a spate of weak economic data as investors cheered a new bailout plan for Greece. The Dow Jones Industrial Average staged a late-day surge to close near the day's highs, up 128.21 points, or 1.03%, at 12569.79. The Standard & Poor's 500-stock index rose 14.10 points, or 1.06%, to 1345.20, while the Nasdaq Composite gained 38.44 points, or 1.37%, to 2835.30. The gain was the blue-chip Dow's fourth consecutive advance, though the blue-chip Dow remains 1.9% lower for the month. In spite of weaker readings on home prices, regional manufacturing and consumer confidence, all but one of the 30 Dow components and all 10 sectors in the S&P 500 were in positive territory.
[Sign up to get reports daily]
Tech and health-care stocks led the gains, with Pfizer adding 2.5%, Cisco Systems up 2.1% and Merck adding 1.5%. The gains were powered by news Germany is considering dropping its push for an early rescheduling of Greek bonds in order to facilitate a new package of aid loans for Greece. Manufacturing activity in the Chicago area fell unexpectedly to its lowest level since November 2009, while consumer confidence also registered a surprise decline. An assessment of manufacturing activity by the Federal Reserve Bank of Dallas was also sharply lower than expected.
European Markets
European stock markets closed sharply higher Tuesday on hopes that Greece will be able to avoid a restructuring of its debt, with Greek banks including Eurobank Ergasias surging 10%, while oil stocks such as Total SA gained as the euro rose and the dollar fell. On the downside, shares of mobile giant Nokia Corp. sank nearly 18% after a profit warning, making it one of the biggest decliners on the Stoxx Europe 600 index which nevertheless closed up 0.8% at 281.06. The Wall Street Journal reported that Germany may abandon a push to reschedule Greek debt early, which would allow for fresh EU aid for Greece. The Greece ASE Composite index soared 5.6%, with shares of Eurobank Ergasias and National Bank of Greece up around 11% and Alpha Bank AE up 8.6%.
German and French banks have some of the largest holdings in Greek bonds, while Credit Agricole SA and Societe Generale SA also each have Greek subsidiaries. Shares of Societe Generale jumped 2.5%, and Credit Agricole rose 1.8%, both heavyweights on the French CAC 40 index, which closed up 1.6% at 4,006.94. One bank that bucked the trend was Bank of Ireland, which dropped nearly 28% in Dublin after the lender announced a liability management exercise that would result in some holders of junior debt facing losses of up to 90%. In Germany, shares of Deutsche Bank AG rose 2%. Gains for the chemicals sector shares of BASF SE jumped 3.8% also boosted the German DAX 30 index, which closed up 1.9% at 7,293.69. Peripheral markets outside of Greece also mostly rose. Spain's IBEX 35 jumped 2.1%, led by a 4% rise by Banco Santander SA and a 3.2% rise for BBVA SA. Heavyweight oil stocks rose on higher crude prices. Total SA and Royal Dutch Shell PLC were up 1.5% and 2.7%respectively. BP PLC rose 1.9%. The FTSE 100 index closed up 0.9% at 5,989.99.
Asian Markets
Asian markets rallied Tuesday, with Tokyo shares jumping on optimism the country's industrial output may have seen its worst, while stocks in Shanghai emerged from an eight-session losing streak on bargain buying across several sectors. Investors brushed aside some bad news in the region, such as Moody's review of Japan's ratings for a possible downgrade and weaker than expected economic growth data in India.
The euro also advanced as risk appetite improved after a report in The Wall Street Journal said Germany was considering not pushing for a rescheduling of Greek bonds. Japan's Nikkei Stock Average finished 2% higher at 9,693.73 after government data showed industrial production rose a seasonally adjusted 1% in April. A survey released with the data showed industrial output projected to improve to 8% in May, compared with a previous forecast of 2.7%.
Among the gainers, Nippon Steel added 2.5% and Mitsubishi Heavy Industries climbed 4.8%. Moody's decision to place Japan's sovereign-debt ratings on review for a possible downgrade served only to accelerate stock gains in the afternoon, as the yen was weighed by the move. Among exporters, Sharp rose 2.7%, Toyota Motor added 2.1% and Isuzu Motors climbed 3%.
Elsewhere, China's Shanghai Composite rose 1.4% to 2,743.47, Hong Kong's Hang Seng Index climbed 2.2% to 23,684.13 and South Korea's Kospi added 2.3% to 2,142.47. Taiwan's Taiex rose 1.9% to 8,988.84. Chinese power utilities traded in Shanghai as well as Hong Kong got a boost from Beijing's decision to increase power tariffs modestly in several mainland Chinese provinces. Huadian Power International rose 1.6% and Huaneng Power International climbed 2% in Shanghai; in Hong Kong, the stocks added 1.8% and 0.9%, respectively.
Base Metals
Copper closed at its highest price in almost four weeks on the London Metal Exchange Tuesday, supported by euro gains against the dollar and buoyant equity markets. At the close, LME three-month copper traded at $9,210 a metric ton, up 0.1% on Friday's close. Both equity markets and the euro received a boost Tuesday from speculation that Greece may secure a second round of bailout money, easing concerns of debt contagion in the region.
Base metals, which are used widely in industry, tend to eye the stock markets as a barometer for the health of the wider economy. The metals are also priced in dollars, making them appear cheaper when the greenback softens in relation to other currencies. Oil futures finished at a three-week high Tuesday after the dollar sank against the euro and a pipeline network serving a key U.S. oil hub was shut down. Light, sweet crude for July delivery settled up $2.11, or 2.1%, at $102.70 a barrel on the New York Mercantile Exchange, their highest settlement since May 10. Brent crude on the ICE futures exchange added $1.95, or 1.7%, to $116.63 a barrel. The euro advanced to a three-week high against the dollar after the Wall Street Journal reported that Germany is considering dropping its push for an early rescheduling of Greek bonds in order to facilitate a new package of aid loans for the debt-laden country. Separately, a less than 10-barrel spill at a Kansas pump station along TransCanada's Keystone network led the operator to shut down the entire pipeline system, a spokesman said Tuesday. Gold futures ended a touch lower, while other precious metals locked in gains, as stronger equities and a weak dollar lured buyers to the complex. The most actively traded gold contract, for August delivery, settled down 5 cents, at $1,536.80 a troy ounce on the Comex division of the New York Mercantile Exchange. June-delivery gold ended down 40 cents, at $1,535.90 a troy ounce.
More from IBT Markets:
Subscribe to get this delivered to your inbox daily
Follow us on Facebook.
Follow us on Twitter.