World Market Overview Report 25/03/2011
US Markets
U.S. stocks gained Thursday as investors largely looked past the deepening political crisis in Portugal to focus on encouraging earnings from technology companies and U.S. jobs data. The Dow Jones Industrial Average rose 89 points, or 0.7%, to 12175 in late afternoon trading, led by a 2.3% rise in Home Depot. The Nasdaq Composite gained 1.4% to 2736. The Standard & Poor's 500-stock index added 0.9% to 1310, lifted by its consumer discretionary and technology sectors. Boosting technology stocks, Micron Technology climbed 7.9% after reporting a better than expected 15% jump in fiscal second-quarter revenue.
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The semiconductor company said it is still assessing the impact of the earthquake and tsunami in Japan, a reaction that calmed investors nervous that the natural disasters would wipe out a significant chunk of revenue for semiconductor companies. Graphics chip maker Nvidia soared 8.6%. Red Hat, a provider of open-source software, surged 18% after its fiscal fourth-quarter profit jumped 43%. Its revenue benefited from record bookings and billings. Among blue-chip stocks, AT&T rose 1.8% after Bernstein upgraded the stock to outperform from market perform.
Meanwhile Bank of America weighed on the Dow, sliding 1.4% as analysts digested the Federal Reserve's rejection earlier this week of the bank's plan to increase its dividend this year. The deepening political crisis in Portugal appeared to have little effect on the stock market. The country's parliament rejected a new government austerity plan Wednesday, spurring the resignation of Prime Minister Jose Socrates. Like Greece and Ireland before it, Portugal will likely have to request financial assistance to meet its obligations. U.S. economic data was mixed Thursday, but initial jobless claims unexpectedly fell by 5,000 to 382,000 last week, encouraging investors. Economists had forecast an unchanged level of claims.
European Markets
European markets rose sharply Thursday, led by gains for U.K. retailers and German car makers, while investors largely shrugged off the resignation of Portugal's prime minister. The Stoxx Europe 600 index gained 1% to end at 275.77. Shares of Kingfisher PLC rallied 7.2% after the home-improvement retailer hiked its dividend and set out ambitious growth plans. Clothing retailer Next PLC rose 4% after the company reported a 10% increase in full-year profit. Together, the two stocks helped lift the U.K.'s FTSE 100 index 1.5% to 5,880.87.
In Frankfurt, the DAX 30 index surged 1.9% to close at 6,933.58, as car manufacturers stocks rallied. BMW gained 4.2%, while Daimler rose 3.5%. Supermarket operator Metro AG rose 3.4% following an upgrade to buy from hold at ING. Chemicals giant BASF SE climbed more than 3% after the company said in a presentation on its website that it expects sales and earnings in the first quarter to be significantly higher than a year earlier. In Portugal, the PSI 20 index climbed 1.1%. The country's parliament rejected late Wednesday further austerity measures. The move prompted the resignation of Prime Minister Jose Socrates and took Portugal a step closer to requiring a European Union bailout.
Shares of Portugal Telecom rose 1.6%, recovering some of the 4.3% fall for the stock over the previous two sessions. Portugal's rejection of austerity measures came as European Union leaders convened Thursday for a summit on tackling the debt crisis. Madrid's IBEX 35 index rose 1.1%, with investors shrugging off news that Moody's Investors Service cut the senior debt ratings on 30 smaller Spanish banks. Shares of Banco Santander SA, which wasn't downgraded, rose 1.4%. In France, the CAC 40 index climbed 1.4% to end at 3,968.84, as car maker Peugeot SA rallied nearly 4%.
Asian Markets
Asian markets ended mostly higher Thursday as solid gains in commodity prices and an advance on Wall Street overnight superseded geopolitical worries in the Mideast and North Africa as well as concerns over sovereign debt in the euro zone. Japanese stocks ended with modest losses after a choppy session as uncertainty about the stability of the Fukushima Daiichi nuclear-power complex and worries about the economic impact from the March 11 earthquake and tsunami spurred a decline in several manufacturers.
The Nikkei Stock Average fell 0.2% to 9,435.01 in Tokyo, while China's Shanghai Composite slipped 0.1% to 2,946.71. South Korea's Kospi added 1.2% to 2,036.78, Hong Kong's Hang Seng index gained 0.4% to 22,915.28, and Taiwan's Taiex climbed 0.4% to 8,576.40. Several resource sector shares jumped in the region after gold prices hit a record high and copper prices soared overnight in New York, with energy shares also inspired as Nymex crude-oil prices stayed above $105-a-barrel. Cnooc rose 1.8% and Zijin Mining Group climbed 1.5% in Hong Kong. Shandong Gold-Mining added 0.8% in Shanghai and Sumitomo Metal Mining gained 4.7% in Tokyo, while Sterlite Industries India advanced 1.2% in Mumbai trading.
Japanese shares struggled for traction amid worries that the earthquake-damage costs will exceed the Y25 trillion that the government had estimated. Several manufacturers lost ground, with Nissan Motor slumping 4.6% after Chief Executive Carlos Ghosn was quoted as saying in a Bloomberg News interview that about 40 parts suppliers in Japan were hampered by the devastating earthquake. Among other major decliners, Toyota Motor fell 2.7%, Honda Motor lost 2.6% and Canon shed 3.4%.
Base Metals and Oil
Base metals closed mostly slightly lower on the London Metal Exchange after weak U.S. durable good orders damped market sentiment. Durable goods orders unexpectedly tumbled in February, posting their largest drop in fourth months down 0.9%, the Commerce Department said. The figures were disappointing for the industrial metals, many of which are widely used in manufacturing. Crude futures settled nearly flat Thursday, as traders weighed rising turmoil in the Middle East against renewed concerns about Europe's sovereign debt crisis.
Light, sweet crude for May delivery settled 15 cents lower at $105.60 a barrel on the New York Mercantile Exchange, after trading as high as $106.69 earlier in the session. Brent crude on the ICE futures exchange settled 17 cents higher at $115.72 a barrel. Investors cashed in on record gold prices, but losses were kept in check as participants still wanted a refuge amid a political crisis in Portugal, fighting in Libya and Japan's nuclear troubles. The most actively traded gold contract, for April delivery, lost $3.10, or 0.2%, to settle at $1,434.90 a troy ounce on the Comex division of the New York Mercantile Exchange. Thinly traded nearby March gold declined $3.10, to $1,434.80.
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Supplied by Morrison Securities.