World Market Overview 7/22/2011
US markets
U.S. stocks surged closer to multi-year highs Thursday, as hopes for a major budget deal in Washington and efforts to contain Europe's sovereign-debt crisis whetted investors' risk appetite. The Dow Jones Industrial Average finished 152.50 points higher, or 1.21%, at 12724.41, for its second triple-digit gain in three sessions. All but one Dow component advanced as investors applauded steps toward a fresh Greek financing package. Stocks pushed higher on afternoon reports that a U.S. budget bargain neared, though the White House and a spokesman for House Speaker John Boehner denied it. The Standard & Poor's 500-stock index gained 17.96 points, or 1.35%, to close at 1343.80, led by the financial sector. The technology-heavy Nasdaq Composite rose 20.20 points, or 0.72%, to 2834.43. Investors faced a full docket of economic data and earnings reports, but fiscal debates on two continents drove Thursday's action.
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The advance left the blue-chip index a little more than half a percentage point from the multi-year closing high it reached in late April. The broader S&P 500 stood about 1.5% from its own high-water mark. In corporate news, Medco Health Solutions leapt 14% after Express Scripts moved to buy the company for $29.1 billion. Express Scripts' stock gained 5.4%. Morgan Stanley climbed 11% after swinging to a loss on a restructuring charge but showing resurgent revenue in the company's investment-banking, trading and wealth-management units. Intel was the sole blue-chip decliner, falling 0.8%. The company's second-quarter profit rose a better-than-expected 2.3%, but margins fell, and Intel also slightly trimmed its forecast for unit PC shipments for the year.
European markets
European stocks soared and the euro advanced strongly as European leaders edged closer to a fresh financing package for Greece and containing possible effects in other debt-laden members of the euro zone. The brightening prospects for a fresh Greek financing package spurred investors to snatch up riskier assets. The Stoxx Europe 600 index rose 1% to 270.48, after initially falling as much as 0.9% on disappointing economic data from Europe and China. Banks were the big winners, with Commerzbank soaring 9.6% in Frankfurt, Societe Generale climbing 6.2% in Paris and Barclays tacking on 7.7% in London. Financial stocks also led rallies in Greece, where the ASE Composite Index rose 2.5%, and Italy, where the FTSE MIB index climbed 3.8% to 19490.7. Spain's IBEX 35 leapt 2.9%, Portugal's PSI 20 climbed 2.5% and Ireland's ISEQ edged up 0.6%. Pharmaceutical stocks were strong performers. Roche Holding rose 1.3% after the company lifted its profit outlook following better-than-expected first-half results. In London, AstraZeneca rose 2% after U.S. drug regulators approved its anticlotting drug Brilinta. Nokia rose 2.5%. Though the Finnish phone maker posted a second-quarter net loss, the results were better than expected. Ericsson shed 9.7%. It reported a lower-than-expected profit as restructuring charges and the strong krona hurt the bottom line. Rival Alcatel-Lucent fell 1.4% in Paris. France's CAC-40 surged 1.7% to 3816.75. Remy Cointreau rose 5.7% after the drinks company reported a 16% rise in sales. In London, the FTSE 100 rose 0.8% to 5899.89. Rio Tinto fell 1% and Xstrata declined 1.1% as miners fell on data showing that China's manufacturing activity contracted in July, according to David Jones, chief market strategist at IG Index. In Frankfurt, the DAX increased 1% to 7290.14, though BMW shed 1.1%, as auto makers fell on the weak Chinese economic report and data showing that the euro zone's economy slowed sharply in July.
Asian markets
Asian shares ended mixed Thursday, with Chinese manufacturing data weighing on markets in China and Australia, while a rally in Fast Retailing supported Tokyo. Trading remained cautious ahead of an emergency summit of euro zone leaders later in the day, after an agreement was reached late Wednesday between France and Germany on a second bailout package for Greece. The Shanghai Composite Index fell 1% to 2765.89, while Hong Kong's Hang Seng Index edged down 0.1% to 21987.29. Japan's Nikkei Stock Average ended the day little changed at 10010.39, Taiwan's Taiex gained 0.1% to 8717.14 and South Korea's Kospi lost 0.5% to 2145.04. The drop in mainland Chinese stocks came after a preliminary reading showed HSBC's China purchasing managers' index fell to 48.9 in July from 50.1 in June. A measure below 50 indicates a contraction. In Shanghai, Aluminium Corp. of China shares fell 1.8% and Jiangxi Copper lost 2.8%; in Hong Kong, they dropped 1.5% and 2.4%, respectively. In Tokyo, Fast Retailing jumped 2.9% after Nomura lifted its earnings forecasts. Cnooc dropped 3.6% in Hong Kong, extending Wednesday's 3.2% decline, after the company agreed to buy bankrupt oil-sands developer OPTI Canada for about $2.1 billion. In Seoul, LG Chem fell 6.5% and Hynix Semiconductor Inc. lost 2.3%, both after posting second quarter profits that were down from a year earlier.
Base metals
Base metals closed mostly lower on the London Metal Exchange Thursday although earlier losses were pared after European leaders outlined a proposal to handle Greece's debt crisis, easing concerns of debt contagion in the region. At the close LME three-month copper traded at $9,675 a metric ton, down 0.8% on the day but well above the intraday low of $9,608/ton. Aluminum and lead finished the session in positive territory, both trading 0.2% higher at the close. Crude futures pushed higher Thursday, briefly topping $100 a barrel, as investors cheered progress on an agreement to aid Greece and the world's largest oil consumers decided against releasing additional oil stockpiles. Light, sweet crude for September delivery settled 73 cents, or 0.7%, higher at $99.13 a barrel on the New York Mercantile Exchange, after rising as high as $100.16 earlier in the session. Europe's Brent crude fell 41 cents to end at $117.74 a barrel. The move above $100, though brief, was the first time oil breached the key triple-digit level in over a month. The rise suggested ebbing concerns that fuel use would drop because of spreading debt problems in Europe or economic slowdowns in the U.S. and possibly China. Separately, the International Energy Agency on Thursday decided against a second release of strategic oil reserves following the 60 million-barrel release announced a month ago. Gold futures fell for a third day as perceived progress toward sovereign debt deals in the U.S. and Europe eased investor demand for a safe place to park cash. Gold for August delivery, the most actively traded contract, settled down $9.90, or 0.6%, at $1,587 a troy ounce on the Comex division of the New York Mercantile Exchange. Silver also slid on the view that a debt deal was near, with the September-delivery contract down 1.5% at $38.974 a troy ounce.
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