Global Markets Overview 09/01/2011
US Markets
U.S. stocks advanced Wednesday, pushing the Dow Jones Industrial Average back into positive territory for 2011 and capping a four-day winning streak that closed a volatile August. The blue-chip Dow finished with a gain of 53.58 points, or 0.5%, to 11613.53, the seventh rise in eight days. The blue-chip measure was led by Alcoa, which gained 44 cents, or 3.6%, to $12.80. The aluminum producer's stock and others in the sector got a boost after Goldman Sachs analysts said they expect demand for metals to remain fairly healthy, driven by emerging markets. AT&T led blue-chip decliners, shedding $1.14, or 3.9%, to 28.48, after the U.S.
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Justice Department filed a civil antitrust lawsuit that seeks to block AT&T's proposed $39 billion takeover of T-Mobile. The suit said the combination of the second and fourth largest U.S. cellphone companies would hurt competition and likely raise prices. Major stock indexes turned negative temporarily midsession as investors digested the suit. The Standard & Poor's 500-stock index gained 5.97 points, or 0.5%, to 1218.89, led by financial and utility stocks.
The Nasdaq Composite eked out a rise of 3.35 points, or 0.1%, to 2579.46. Three batches of economic data helped set a positive tone for Wednesday's session. A report by Automatic Data Processing Inc. showed a gain in private-sector hiring this month, while a reading on weak Chicago-area manufacturing managed to beat expectations. A third batch of data showed U.S. factory orders for July rose more than economists had forecast. Market participants said the figures tempered worries of a notably worsened economy, particularly in the jobs sector, ahead of Friday's key nonfarm payrolls report.
Verizon Communications was one of the Dow's weakest stocks, shedding 15 cents, or 0.4%, to 36.17, in the wake of the AT&T suit. Sprint Nextel Corp. was one of the top performers in the S&P 500, jumping 21 cents, or 5.9%, to 3.76. The stock market was wracked by a variety of economic-slowdown and government-debt worries during August. Even after the four-day winning streak, the blue-chip Dow shed 529.71 points, or 4.36%, the measure's fourth straight monthly loss. It was the largest monthly point and percent drop since May 2010, the month of the so-called flash crash."
European Markets
European stock markets rallied Wednesday amid hopes that the Federal Reserve will take another shot at stoking the U.S. economy, while shares of Deutsche Telekom slumped in late action after the U.S. Justice Department moved to block the proposed sale of its T-Mobile USA unit to AT&T Inc. The Stoxx Europe 600 index jumped 2.9% to close at 237.43. The index still posted a monthly decline of 11% after worries over a double-dip recession and a growing sovereign-debt crisis hammered stocks at the start of August. French stocks were some of the biggest movers in Europe.
Shares of Bouygues jumped nearly 16% after the group said it plans to repurchase EUR1.25 billion of its shares at a premium of 30% to Tuesday's closing price. The stock was the top performer on the CAC 40 index, which rose 3.1% to close at 3,256.76. Media and telecom group Vivendi SA also gained, rising 4.9% after the company stuck to its earnings forecast, helped by a strong performance in video games. The gains for Europe followed a modest rise for U.S. markets Tuesday after the minutes from the latest Federal Open Market Committee meeting showed some members wanted a more substantial move beyond the pledge to keep rates low for two years. Wall Street extended those gains Wednesday, even as data showed a smaller than expected rise in private sector payrolls in August.
In Frankfurt, shares of Deutsche Telekom fell 7.6% after the Justice Department sued to block AT&T's planned $39 billion acquisition of T-Mobile USA, which would concentrate 80% of the U.S. mobile phone market between two competitors. The German DAX 30 climbed 2.5% to close at 5,784.85. The U.K.'s FTSE 100 index rose 2.4% to 5,394.53. Shares of hedge-fund manager Man Group PLC were among the top performers in London, climbing 3% after Morgan Stanley upgraded the stock to overweight from equal-weight.
Most peripheral markets were also higher amid reports that German Chancellor Angela Merkel's cabinet had backed measures to expand the lending capacity of the euro zone's rescue fund and give it the power to buy government bonds. The agreement sets the stage for a crucial Sept. 29 parliamentary vote. The Greek ASE Composite index was the big exception, tumbling 4.4% to 915.98 as the index continued to pull back from its 14% surge Monday, when EFG Eurobank Ergasias SA and Alpha Bank SA agreed to merge. Shares of EFG Eurobank dropped 17% Wednesday. Also lower, Piraeus Bank shed 15% after the firm confirmed it had tapped a special liquidity fund set up by the country's central bank.
Asian Markets
Asian equity markets Wednesday closed out a poor month on an upbeat note, as hope for further measures to stimulate the U.S. economy spurred some bargain hunting. South Korea's Kospi climbed 2% to 1880.11 and Hong Kong's Hang Seng Index rose 1.6% to 10534.85. Japan's Nikkei Stock Average and China's Shanghai Composite ended the day nearly unchanged, at 8955.20 and 2567.34, respectively. Markets in India, Indonesia and Malaysia were closed for a public holiday. Around the region, market losses for the month of August marked by a dramatic rise in the level of concern about the U.S. economy's trajectory ranged from 2.9% for the Australian index to 11.9% for the South Korean.
Wednesday's gains came amid expectations for further action from the Federal Reserve to support the U.S. economy, based on the newly released minutes of its latest interest-rate-setting meeting. Some companies that export to the U.S. outperformed Wednesday, particularly in South Korea, with Kia Motors up 2.5% and Hyundai Motor 3.3% higher. Nintendo jumped 4.4% and trading house Mitsubishi gained 1.9% in Tokyo, while computer maker Lenovo Group climbed 4% in Hong Kong. Evergrande Real Estate Group jumped 4.3% in Hong Kong after reporting first-half earnings late Tuesday. Other property developers also gained ground, with China Overseas Land & Investment up 3.5% and Agile Property Holdings up 4.4%.
Commodities
Base metals closed higher on the London Metal Exchange after a relatively quiet and cautious day of trading, with investors eyeing key manufacturing and labor data in the sessions ahead. LME three-month copper ended the session up 1.2% at $9,274 a metric ton. LME three-month aluminum closed 1.9% higher at $2,469/ton. Oil futures finished little changed Wednesday after the government said oil inventories rose sharply, but the impact was blunted by a drop in gasoline stockpiles. Oil stockpiles rose 5.3 million barrels last week, the Department of Energy said in its weekly report, as refiners cut utilization by 1.1 percentage points.
Such a big increase typically weighs on oil prices, but a sharp drop in gasoline inventories and higher gasoline demand blunted the effect. Light, sweet crude for October delivery settled down 9 cents, or 0.1%, at $88.81 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 62 cents, or 0.5%, higher at $114.64 a barrel. Gold futures edged higher as the view that further monetary easing in the U.S. would boost precious metals outweighed the drag from stronger equities markets.
Gold for December delivery, the most actively traded contract, rose $1.90, or 0.1%, to settle at $1,831.70 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest ending price since Aug. 23. Nearby September-delivery gold also rose, climbing $1.80, or 0.1%, to $1,828.50 a troy ounce.