Global Markets Overview 06/21/2011
US Markets
A pledge by European leaders to head off a Greek debt default helped push U.S. stocks higher Monday, easing the market's recent sovereign-debt jitters. The Dow Jones Industrial Average rose 76.02 points, or 0.63%, to 12080.38, for its third straight gain and highest close since June 9. The Standard & Poor's 500-stock index closed 6.86 points, or 0.54%, higher at 1278.36, for its fifth gain in six sessions. The Nasdaq Composite climbed 13.18 points, or 0.5%, to 2629.66, to snap a three-day losing streak. Money managers used terms like "relief rally" to describe Monday's session.
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Stocks found their footing after European leaders expressed confidence that Greece will concede on economic reforms in order to receive another tranche of aid, raising hopes that a Greek default will be avoided. All S&P 500 sectors except financial stocks advanced. Health care and consumer discretionary stocks led the measure's gainers. Caterpillar rose $2.23, or 2.3%, to 98.18, to lead the blue-chip Dow. It was followed by DuPont, which rose 82 cents, or 1.7%, to 50.39. The blue-chip index's advance was limited by financial components J.P. Morgan Chase, which fell 32 cents, or 0.8%, to 40.48, and Bank of America, which lost 8 cents, or 0.8%, to 10.60. In corporate news, PNC Financial Services said it was buying Royal Bank of Canada's U.S. retail-banking operations for $3.45 billion. PNC's shares fell 1.13, or 2%, to 56.66. RBC's advanced 11 cents, or 0.2%, to 55.65. Sprint Nextel's shares gained two cents, or 0.4%, to 5.21, after Philip Falcone's Harbinger Capital Partners said its mobile-broadband start-up, LightSquared Inc., signed a 15-year agreement to jointly build and operate a planned new wireless network.
European Markets
Bank stocks led European markets lower Monday after euro-zone finance ministers delayed a decision on providing further aid for Greece, while Italian stocks were down sharply on downgrade fears. The Stoxx Europe 600 index ended down 0.5% at 265.76. Following a Sunday night meeting in Luxembourg, European finance ministers said they won't decide on giving Greece EUR12 billion of bailout funds until lawmakers in Athens agree to new spending cuts and economic reforms. They also said another bailout package will be needed as Greece won't be able to access lending markets again in early 2012. Shares of Lloyds Banking Group PLC dropped 2.6% in London, Natixis fell 2.4% in Paris and BBVA SA dropped 1.1% in Madrid. Some of the biggest losses came in Italy after Moody's Investors Service said late Friday it put the country's Aa2 local- and foreign-currency government bond ratings on review for possible downgrade. Shares in banking giant UniCredit SpA dropped 2.2% and Italy's FTSE MIB index closed down 2% at 19,704. Among other peripheral markets, Greece's benchmark index fell 2% to 1,229.43 and Spain's IBEX 35 index was down 0.9% at 10,004.7. The French CAC 40 index closed down 0.6% at 3,799.66, led by the losses for Natixis and other banks. In addition, Airbus parent EADS dropped 0.9% as Airbus and rival Boeing Co. announced orders for new aircraft at the Paris Air Show. Most airlines gained ground, helped by falling crude prices. Among them, Deutsche Lufthansa AG rose 1% in Frankfurt, helping offset losses for banks and utility stocks. The German DAX 30 index ended the session down 0.2% at 7,150.21. Among the fallers, shares in RWE AG dropped 1.6% and Commerzbank AG fell 1.2%. In London, the FTSE 100 index closed down 0.4% at 5,693.39. As well as the losses for bank stocks, miners took a hit as investors cut their risk exposure, with Lonmin PLC down 1.4% and Antofagasta PLC 1% lower.
Asian Markets
Most Asian stock markets were lower Monday, with mainland banking stocks in Hong Kong and China dragged down by a broker's downgrade of the sector. Hong Kong's Hang Seng Index gave up 0.4% to end at 21,599.51, while the Shanghai Composite lost 0.8% to 2621.25. South Korea's Kospi slid 0.6% to 2019.65. However, Japan's Nikkei Stock Average managed to cling to slim gains, ending up nearly unchanged but on the positive side at 9354.32. Credit Suisse Monday cut its forecast for China's 2012 gross domestic product growth to 8.5%, from 8.9%. The broker also downgraded China's banking sector to underweight from overweight, cutting Agricultural Bank of China to underperform from outperform and Bank of China to neutral from outperform. Those two were down 1% and 0.5% in Hong Kong, respectively. Hong Kong real-estate shares made far sharper falls Monday, weighed by both the Credit Suisse concerns and the prospect of new measures to cool local property prices. Hong Kong Chief Executive Donald Tsang was considering resuming a controversial subsidized housing program, people familiar with the matter said Saturday, as pressure from local and Beijing officials to tame soaring property prices in the city mounted. Among the worst hit: Cheung Kong Holdings fell 3.5%, Henderson Land Development dropped 3.5% and Sino Land Co. ended down 3%. The Japanese market garnered support from utility stocks. Advancers in Tokyo included Tokyo Electric Power, up 4%; Kansai Electric Power, up 7.8%; and Chubu Electric Power, up 7.9%.
Base Metals
Base metals closed mostly lower on the London Metal Exchange Monday as investors continued to eye debt-laden Greece, although the metals had trimmed earlier losses significantly after a recovery in the euro and a rise in U.S. stock markets. LME three-month copper closed at $9,000 a metric ton--down 1% on the day but well above its intraday low of $8,900/ton. LME three-month aluminum meanwhile finished the session at $2,530/ton--down 0.5%, but much stronger than its earlier low of $2,516.25/ton. Crude futures ended slightly higher Monday, pausing as investors await more signals on whether the European Union can successfully manage Greece's debt crisis. Light, sweet crude for July delivery settled 25 cents, or 0.3%, higher at $93.26 a barrel on the New York Mercantile Exchange, after falling as low as $91.14 earlier in the session. Brent crude on the ICE futures exchange closed $1.52 lower at $111.69 a barrel. Oil, along with stocks and other commodities, remains focused on the situation in Greece and the effect a debt default in the country could have on Europe's largest banks. After initially tumbling to fresh four-month lows, crude rebounded throughout Monday's session after European officials expressed confidence that Greece would agree to more austerity measures, and therefore receive additional aid. Gold posted mild gains on growing concerns and uncertainty about Greece as European officials made little progress in resolving the nation's sovereign debt troubles and further financial aid was delayed. The most actively traded contract, for August delivery, gained $2.90, or 0.2%, to $1,542.00 a troy ounce on the Comex division of the New York Mercantile Exchange. Thinly traded June-delivery gold settled up $2.90, or 0.2%, at $1,541.50 a troy ounce.
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