Global Markets Overview 06/08/2011
US Markets
A gloomy economic assessment from Federal Reserve Chairman Ben Bernanke erased an earlier rally in U.S. stocks, sending major indexes in the final minutes of Tuesday's session to their fifth-consecutive drop. The Dow Jones Industrial Average closed down 19.15 points, or 0.16%, to 12070.81. The blue chip index has dropped 3.97% during its five day skid, its longest losing streak since August. The Dow rose as much as 89 points during Tuesday's session before finishing lower. The Standard & Poor's 500-stock index dropped 1.23 points, or 0.1%, to 1284.94, led lower by the technology and telecom sectors. The index, which is down 4.5% during its five-day losing streak, hit its lowest closing level since March 18. The technology-oriented Nasdaq Composite dropped 1 point, or 0.04%, to 2701.56, its third-straight loss and fourth decline in the last five sessions.
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The sharp afternoon reversal came after Bernanke offered downbeat comments on the U.S. economy. He said economic growth has been somewhat slower than expected, although he added that the recovery should pick back up in the second half of 2011 despite recent signs of weakness. Bernanke's comments follow a drumbeat of weak economic data and worries that the recovery is running out of steam. In corporate news, Temple-Inland soared 8.48, or 40%, to 29.49, as International Paper offered to acquire it for about $3.38 billion in cash. International Paper disclosed the bid publicly late Monday after being rejected by the rival cardboard-box producer in private discussions. International Paper shares rose 13 cents, or 0.4%, to 29.78. Ford Motor plans to reduce its debt by $2.6 billion by the end of the second quarter, bringing its total automotive debt to $14 billion. Its shares rose four cents, or 0.3%, to 13.95.
European Markets
European stocks ended Tuesday's session slightly lower, with concerns about sovereign debt overshadowing broker upgrades that helped lift several shares, including tire maker Michelin and lender Credit Agricole SA. The Stoxx Europe 600 index ended 0.1% lower at 271.87, marking a fifth consecutive session of losses. Highlighting the area's underlying debt worries, Greece's ASE Composite fell 2% to 1,297.05, including a 2.6% fall for Alpha Bank. Shares of tire maker Michelin rallied 1.7% after Exane BNP Paribas upgraded the stock to outperform. Credit Agricole rose 0.4% after it was upgraded to buy from neutral at Nomura. The moves helped lift France's CAC 40 index 0.2% to 3,871.92. Most other bank stocks posted modest gains and mining companies were also higher, with Rio Tinto PLC up 1.2% in London. Shares of Resolution Ltd. rose 2.8% after the U.K. life insurer said it will return GBP500 million to investors. The stock was a top gainer in London's FTSE 100 index, which ended virtually flat at 5,864.65, a gain of 1.49 points. Utility stocks moved broadly higher, with German electricity producer E.ON AG jumping 3.1%. It led the DAX 30 index 0.3% higher to finish at 7,103.25.
Asian Markets
Asian shares diverged Tuesday, as a rebound for Tepco and gains for Toyota helped support the Japanese market but U.S. economic worries preyed on Hong Kong shares. Japan's Nikkei Stock Average ended 0.7% higher at 9442.95, erasing some of Monday's 1.2% loss. Toyota Motor Corp. closed with a 2.2% gain after the Nikkei newspaper reported the company will increase output of its Prius hybrid by 70% due to strong demand. Other Japanese gainers included Tokyo Electric Power Co., or Tepco, which rose 4.4% bouncing back a bit from a limit-down 28% loss a day earlier after Japanese government chief spokesman Yukio Edano reportedly said Monday that authorities were trying to avoid bankruptcy for the company. After a three day weekend, Hong Kong investors were catching up to losses inspired by disappointing U.S. jobs data at the end of last week. The Hang Seng Index did manage to move off early-morning lows to end down a modest 0.4% at 22,868.6. Some shares sensitive to global growth held onto losses, such as shipper Cosco Pacific, which closed down 2%. HSBC Holdings slipped 0.2% after Credit Suisse cut its rating on the stock to neutral from outperform. Previously announced changes to the Hang Seng Index went into effect Tuesday, with AIA Group joining the blue-chip index and Foxconn International Holdings departing. Both were down by 1.6% and 2.3%, respectively. The Shanghai Composite had a better post-holiday return, ending 0.6% higher at 2744.30.
Base Metals
Base metals made very little progress on the London Metal Exchange Tuesday, closing largely flat on the day as market players avoided making any bold moves in a trading session largely devoid of directional cues. Instead, investors sat on their hands ahead of a closely watched speech by U.S. While a weaker U.S. dollar lent some support to the dollar-denominated metals, which appear cheaper to foreign currency holders when the greenback softens, upward progress was limited and flagship three month copper closed the session at $9,138 a metric ton, just 0.1% above the previous day. Oil futures settled nearly flat Tuesday, as traders remained on the sidelines ahead of a closely watched OPEC meeting. Light, sweet crude for July delivery settled up 8 cents, or 0.1%, at $99.09 a barrel on the New York Mercantile Exchange. The contract traded in a wide range, reflecting uncertainty over Wednesday's meeting. Nymex crude fell as low as $99.74 in intraday trading before ending higher. Brent crude, however, rose sharply, with the July contract settling up $2.30, or 2%, at $116.78 a barrel on the ICE futures exchange. Gold futures ended slightly lower, as traders looked past a weakening dollar while awaiting a speech late in the day from Federal Reserve Chairman Ben Bernanke. The most actively traded contract, for August delivery, fell $3.20, or 0.2%, to settle at $1,544.00 a troy ounce on the Comex division of the New York Mercantile Exchange.