Global Markets Overview 06/20/2011
US Markets
U.S. stocks closed higher Friday, snapping a six-week losing streak, as hopes intensified for a resolution to the Greek debt crisis. The Dow Jones Industrial Average finished up 42.84 points, or 0.36%, at 12004.36, its fourth gain in the last five sessions. For the week, the blue-chip index inched up 0.4%. It still remains down 6.3% since notching a three-year closing high on April 29. The Standard & Poor's 500-stock index rose 3.86 points, or 0.3%, to 1271.50, driven by gains in the financial, telecom and consumer discretionary sectors.
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Energy stocks lagged as crude oil futures fell to a four-month low. The broad index barely snapped a six-week losing skid, rising 0.52 point for the week. The Nasdaq Composite Index slipped 7.22 points, or 0.28%, to 2616.48, its lowest close this year. The technology-oriented index has declined in nine of the last 11 sessions and has recorded five consecutive weeks of declines. Friday's action followed France and Germany displaying unity in working toward a solution on a new aid package for debt-laden Greece. The Dow rose as much as 111 points early in the session, but pared gains throughout the day. It nearly gave away the entire rally after Moody's Investor Service placed Italy on alert for a possible downgrade watch. The warning, which came during the final hour of trading, became the latest worry that the contagion risk from the Greek debt crisis is still alive. Investors have been jittery for weeks over concerns that a Greek default would lead to huge losses for creditors. Talks of a solution have temporarily eased those concerns. German Chancellor Angela Merkel and French President Nicolas Sarkozy said they would seek European Central Bank consent for a new rescue package for Greece. The aid would include fully voluntary participation of private investors holding Greek debt. Among stocks in focus, Research in Motion plunged 21%, hitting a five-year low, after the maker of BlackBerry smartphones late Thursday slashed its earnings outlook for the year and said it would trim its work force.
European Markets
European stock markets recovered from early losses to close higher Friday after France and Germany made a united call for swift action on a new Greek aid package. The Stoxx Europe 600 index closed up 0.2% at 267.17, rebounding from early losses after German Chancellor Angela Merkel said she wants a quick solution over a new aid package for Greece and that private-sector participation should be voluntary. Merkel and French President Nicolas Sarkozy said aid should be modeled on the Vienna Initiative, used to help struggling Eastern European nations in 2009. Under that program, banks volunteered to roll over their lending. Talk of a new deal on aid helped boost bank stocks, especially those with significant exposure to Greece. Shares in Credit Agricole SA and Societe General rose 2.5% and 2.4%, respectively. The French CAC 40 index ended the session 0.8% higher at 3,823.74. Bank stocks also rose sharply in those countries seen at risk of contagion if Greece were to default, including a 5.7% gain for Spain's BBVA SA. The Greek ASE Composite closed up 3.8% at 1,254.02 following a cabinet reshuffle in which Evangelos Venizelos was named finance minister, replacing George Papaconstantinou, who will become environment minister. As well as bank stocks, miners also turned higher after Merkel and Sarkozy's comments. Shares in Kazakhmys PLC rose 1.7% and Lonmin PLC gained 1.6%. Gains for the sector helped lift the U.K.'s FTSE 100 index 0.3% to 5,714.94. In Germany, the DAX 30 index ended up 0.8% at 7,164.05, helped by gains for financial stocks. Reinsurer Munich Re led the index with a 2.3% rise, while Deutsche Bank rose 1.4%.
Asian Markets
Asian share markets ended lower Friday, with Europe's debt troubles and uncertainty on the progress of the U.S. economic recovery firmly on the agenda. The Hang Seng Index lost 1.2% extending a 1.8% fall Thursday to finish at 21695.26, while the Shanghai Composite Index dropped 0.8% to 2642.82. The Nikkei Stock Average closed 0.6% lower at 9351.40, while South Korea's Kospi fell 0.7% to 2031.93. In Hong Kong, notable decliners included Esprit Holdings Ltd., down 4.5%, and Tencent Holdings Ltd., down 4.3%. In Tokyo, Nintendo Co. gave up 2.4%, while Toshiba fell 1.7%. Tokyo Electric Power Co. fell 5.6% following local media reports that a device to remove radioactive materials automatically stopped running Thursday evening at the firm's Fukushima Daiichi nuclear complex due to leaking water. Many Korean technology firms traded sharply lower, with Samsung Electronics Co. down 3.4%, LG Display Co. plunging 6.8%, and LG Electronics Inc. 1.7% lower.
Base Metals
Base metals closed mixed on the London Metal Exchange Friday, with investors exercising caution ahead of the weekend amid continuing negotiations over a bailout for Greece. The financial markets have been keenly eyeing developments in Europe as key power brokers try to forge a new aid package for the debt-ridden nation. European finance ministers will meet in Luxembourg Sunday and Monday to continue negotiations on the structure of that new package. Despite a sharp rebound Friday in the euro against the dollar, three-month copper closed the open outcry session at $9,094 a metric ton, only 0.3% higher on the previous day's close. Metal prices tend to trade inversely to the greenback, as they are denominated in dollars and subsequently appear cheaper to buyers using other currencies when it falls. U.S. crude oil futures prices fell 2% to a four-month low of $93.01 a barrel Friday on concern that the Greek debt crisis and sluggish U.S. economic growth will slow oil demand. Euro-zone finance ministers are scheduled to meet in Luxembourg this weekend to discuss a rescue package for Greece. Light, sweet crude oil for July delivery on the New York Mercantile Exchange settled $1.94 lower at $93.01 a barrel, the lowest settle since Feb. 18. Intraday, it traded to a low of $91.84 a barrel. ICE August Brent crude settled down 81 cents at $113.21 a barrel. The spread between the contracts stood at $20.20 a barrel after a record high $22.29 a barrel Wednesday. Gold inched to a one week high on investor uncertainty about a weekend meeting to address Greek debt problems and a weaker dollar. The most actively traded contract, for August delivery, gained $9.20, or 0.6%, to settle Friday at $1,539.10 a troy ounce on the Comex division of the New York Mercantile Exchange. June delivery gold ended at $1,538.60 a troy ounce, up $9.30, or 0.6%.
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