World Market Overview 8/2/2011
U.S. stocks
Financials led U.S. stocks higher Monday as the market got a lift from a stream of deals, corporate earnings and guarded relief that some economic activity has resumed in Egypt. The Dow Jones Industrial Average rose 87 points, or 0.7%, to 12179. The Nasdaq Composite advanced 0.9% to 2794. The Standard & Poor's 500-stock index rose 0.8% to 1322, buoyed by its financial sector.
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Boosting financials, Loews jumped 4.5% after the conglomerate's fourth quarter profit rose 16%, as its CNA Financial insurance unit's earnings surged 23% and it reinstated its quarterly dividend. Fellow insurer American International Group surged 5.5%. Among Dow financial components, Bank of America gained 3%, while American Express climbed 2.6% and J.P. Morgan Chase rose 2.2%.
Anxiety over the turmoil in Egypt eased slightly after opposition parties met with the government over the weekend and banks opened for the first time in more than a week. A burst of deal activity also lifted the market Monday. Biomedical testing group Beckman Coulter jumped 9.7% after diversified manufacturing and technology company Danaher said it would pay $83.50 a share for Beckman, or $6.8 billion in cash, including debt. That represents a 45% premium to Beckman's closing price on Dec. 9 before rumors of the deal were in the market. Shares of Danaher rose 3.3%. Pride International surged nearly 16% after U.K. based Ensco said it would buy the company in a cash and stock deal that values Pride International at a premium of 21% over its closing price of $34.39 Friday. U.S. listed shares of Ensco, which said the deal will make it the second-largest offshore driller in the world, fell 4.6%. Chesapeake Energy rose 5.9% after the firm said it would sell its Fayetteville shale assets and equity stakes in Frac Tech Holdings and Chaparral Energy for around $5 billion.
European stocks
European stocks rose for a fifth consecutive session Monday, buoyed by strong corporate reports and optimism over global economic growth. The Stoxx Europe 600 Index rallied 1% to end at 288.74. The French CAC 40 index surged 1.1% to 4,090.80, while the German DAX 30 index climbed 0.9% to 7,283.62. The U.K.'s FTSE 100 index also ended up 0.9%, rising to 6,051.03, buoyed by the mining sector as metals prices gained. Among individual gainers, Adidas AG rallied 3.6% after the group's chief executive, Herbert Hainer, forecast continued growth for the sportswear manufacturer in 2011. Optimism over the global economy boosted airline stocks, with Deutsche Lufthansa AG ending 2.7% higher and Air France-KLM rallying 3.6%. Shares of SolarWorld AG soared nearly 7% as the German company said revenue for fiscal 2010 surged 29% from the previous year. Also in the sector, SMA Solar Technology AG rallied 7%. Traders shrugged off data showing that German manufacturing orders fell 3.4% in December from the previous month. Orders had risen 5.2% in November.
Asian markets
Asian markets ended mixed Monday, with Tokyo's shares getting a boost from a weaker yen, while energy producers weighed on the Hong Kong market. Japan's Nikkei Stock Average and South Korea's Kospi each rose 0.5%, while Hong Kong's Hang Seng index fell 1.5%. Markets in China, Taiwan and Vietnam remained shut due to the Lunar New Year holiday. Sentiment was aided in some regional markets by Wall Street's rise Friday, and an unexpected drop in the U.S. jobless rate for January.
In Tokyo, the drop in the U.S. jobless rate and a weaker yen bolstered economic recovery hopes and provided a boost to exporter shares. Nikon, Olympus and Toyota Motor rose 2.0%, 1.0% and 0.9%, respectively. Nippon Steel closed down 1.3% and Sumitomo Metal dropped 2.2% following gains of 9.1% and 16%, respectively, Friday. Hong Kong shares lost ground on the first trading day of the Year of the Rabbit, with energy producers and financial plays leading the decline. Cnooc fell 2.9%, Petrochina shed 3.6% and Sinopec shed 4.2% after crude-oil prices fell sharply in New York Friday. Among financial stocks, Agricultural Bank of China shed 2.1% and China Merchants Bank lost 1.7% amid continued concerns about potential monetary tightening measures on the mainland.
Base metals
Base metals closed mostly lower on the London Metal Exchange Monday, following a day of thin trading that saw both copper and tin hit fresh highs, before weakening. With LME warehouse inventories of copper and tin at multi-month highs in recent weeks and China still out of the picture for the Lunar New Year, market players cast doubt on the day's strong start. Prices are being supported by the promise of strength to come, not on current conditions, and with China due to return to the market Wednesday. Copper hit a new record high of $10,160 a metric ton Monday, while tin soared to $31,399/ton. Both slipped as the day wore on to close at $10,045/ton and $31,200/ton respectively. Nickel also put in a solid performance early on before drifting lower, reaching its highest price since May 2008, while zinc hit a three month high. Crude oil futures retreated Monday on indications that tensions in Egypt are easing, as the government sat down with the main opposition group for the first time. Light, sweet crude oil for March delivery settled $1.55 lower at $87.48 a barrel on the New York Mercantile Exchange.
Egypt's popular uprising entered its third week Monday with few signs of a resolution. However, the fact that the uprising has continued this long without any significant supply disruptions and without spreading to major oil producers is causing oil prices to give back much of their recent gains. Gold futures closed marginally lower and copper futures came off highs as a rising dollar took a toll on commodities. Gold for April delivery fell 80 cents, or 0.1%, to $1,348.20 an ounce on the New York Mercantile Exchange. March copper, which traded as high as $4.64 a pound, settled less than a penny lower at $4.575 a pound, shying away from a record close.