Global Markets Wrap

Tue, 08 Jul 2008 09:16


US markets Stocks jumped up and down on Monday, finally landing in negative territory. The seesaw day was dominated by a large dumping of financial shares and a drop in oil that staggered large energy producers. Investors went bargain-hunting for banks in the last half-hour of trading, but still left the major indexes lower. The market started with a 100-point rally in the Dow, which then fell to nearly 150 points negative in afternoon trading. A trader felt that what we're seeing is the beginning of a new phase in the bear market. He added that what we're seeing now is demand destruction. It's going to be reflected in quarterly corporate earnings reports and it's going to be reflected in retailer earnings about back to school. The day also saw a dramatic breaking of the four-month trend of oil and stocks moving in opposite directions. The Dow finished down about 0.5%, while the S&P 500 lost 0.8% and the Nasdaq edged lower by 0.1%.

European stocks rose on Monday, driven by utility shares as merger speculation boosted Iberdrola, and also a drop in the price of crude oil helping the markets to a positive close. Oil and gas producers were among the top performers on the broader market despite a lower oil price, as traders cited a rebound from weakness last week. BP, Total and Royal Dutch Shell were up between 2.5% and 4% respectively. A strategist summed up the gains by saying, the fact that the sellers have been so persistent and there's been nothing but selling over the last six weeks means we are due a period of remission. National indexes rose in all 18 western European markets except Ireland. France's CAC 40 advanced 1.8%, Germany's DAX rallied 2%, while the U.K.'s FTSE 100 increased 1.9%.

JSE

The JSE snapped 4 days of losses even though the bourse closed relatively unchanged with a positive bias. This as banking stocks jumped on bargain hunting and attractive valuations led by Standard Bank. The All Share Index ended almost flat at 28,174 while Top 40 index of blue chips added 35 points to close at 26,555.

The Industrial 25 index was up 1% with MTN rising 6.6%. This gain on speculation it may extend the period of exclusive talks with Reliance Communications Ltd. that ends today. There were gains too for Steinhoff up 2.3%. The banking index surged 4.7%, with Standard Bank up more than 6%. It has a forward P/E multiple of 7 times and a forward dividend yield of 5.8%. Traders said that the banks are on good valuations now; a lot of people are starting to look at that saying that maybe things are not that bad for the local banks, particularly the top-four banks. ABSA gained 5.5% and Firstrand 3.5%.

Resources fell 1%, paced down by Anglo's 1% drop, showing losses for a third day. Gold for immediate delivery fell as much as 1.9% to $915.23 an ounce in London. Gold imports by India, the world's biggest buyer of bullion, slumped 68% from a year earlier in June as high prices eroded demand from jewelers and investors, according to the Bombay Bullion Association. The Gold index fell 0.5% whilst the Platinum index tumbled 1.1%. Despite that Angloplat managed to 2.4% whilst Implats tumbled 3.3%. Sasol 2.5% as Crude oil prices dropped after Iran's foreign minister expressed confidence in talks with western governments on the country's nuclear program.