World Market Overview 04/11/2011

US markets

U.S. stocks fell modestly Friday as investors exercised caution ahead of the potential shutdown of the federal government and the start of U.S. companies' first-quarter earnings reports.

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The Dow Jones Industrial Average declined 29.44 points, or 0.24%, to 12380.05. Alcoa was among the measure's weakest components, falling 1.1% ahead of its Monday earnings report, the unofficial kick-off of the first quarter corporate filings season.

The Nasdaq Composite Index shed 15.73, or 0.56%, to 2780.41. The Standard & Poor's 500-stock index slipped 5.34, or 0.4%, to 1328.17, with its industrial and financial sectors leading to the downside while gains in the energy sector on a rally in crude helped limit the drop. Friday's declines put the Nasdaq Composite and the S&P 500 into negative territory for the week, snapping a two week winning streak. The Nasdaq shed 0.33% on the week while the S&P 500 declined 0.32%. Still, the Dow managed to eke out a slim gain for the week, up 0.03%. U.S. stocks had been up slightly early in Friday's session, but that advance evaporated as investors looked toward the midnight deadline for the federal government's fiscal 2011 budget.

In the event, Congressional leaders reached a last-gasp agreement to avert a shutdown of the federal government, after days of haggling and tense hours of brinkmanship. Word of the deal came just an hour before a midnight deadline. Commodities rallied because a weak dollar makes commodities cheaper for holders of other currencies.

Crude oil topped $112 a barrel, fueled not only by the weaker dollar but also by concerns that Libya won't return to exporting oil soon. Market participants are also looking ahead to the first-quarter earnings season set to kick off Monday. Investors generally expect U.S. corporations to turn in strong numbers for the quarter, but they are worried about what companies might say about the outlook amid rising commodity costs.

Among stocks in focus, Expedia jumped 13% after the online travel-services concern said it will split into two by splitting off its TripAdvisor arm. Seagate Technology climbed 7.8% after the computer hard-disk maker said it will reinstate its dividend.

European markets

European markets advanced Friday, buoyed by a rally in Japanese stocks overnight and solid gains for the mining sector as precious metal prices rose once again. The Stoxx Europe 600 index closed up 0.3% at 281.7. Miners advanced Friday, helped by news that Rio Tinto PLC has clinched a majority interest in long-pursued Riversdale Mining, boosting chances its takeover offer will be approved. Rio shares rose 3.2%. Elsewhere in the sector, Kazakhmys PLC added 1.9% and BHP Billiton PLC gained 2.7%.

Gold prices rose once again as a weaker dollar and concerns about inflation led investors to seek refuge in precious metals. Shares of gold miner African Barrick Gold PLC gained 3.4% and Randgold Resources added 2.1%. Silver miner Fresnillo PLC climbed 2.4%. Dutch mail and parcel-delivery company TNT NV dropped nearly 13% after the group cut the outlook for its express division.

In France, shares of Lafarge SA rose 1.9%. Reuters reported Thursday that the European arm of the group's plaster unit has attracted interest from private-equity funds, citing sources. The CAC 40 index advanced 0.8% to 4,061.91, led by Vallourec SA. Shares of the steel-tube maker rose 4.7% after Credit Suisse lifted its rating on the stock to outperform from neutral. In Germany, the DAX 30 gained 0.5% to 7,217.02, led by gains for exchange operator Deutsche Boerse AG, up 2.9%. The U.K.'s FTSE 100 benchmark closed up 0.8% at 6,055.75, led by miners and shares of defensive stocks such as utility Scottish & Southern Energy PLC, up 2.3%.

Asian markets

Japanese stocks jumped Friday to lead most Asian markets higher, with Tokyo Electric Power Co. driving gains on relief that a powerful earthquake overnight hadn't inflicted much damage and Fast Retailing Co. rising after lifting its profit outlook.

Japan's Nikkei Stock Average, having dropped about 0.6% at one point in early trading, staged a sharp rebound to finish 1.9% higher at 9768.08. The jump helped the benchmark end with a weekly gain of 0.6%. China's Shanghai Composite added 0.7% to 3030.02, Hong Kong's Hang Seng Index climbed 0.5% to 24396.07 and South Korea's Kospi added 0.3% to 2127.97.

Among the decliners, Taiwan's Taiex slipped 0.1% to 8894.54, while India's Sensex fell 0.7% to 19438.53, its fourth successive loss. The gains in Tokyo came as a 7.1-magnitude earthquake in northeastern Japan Thursday night reportedly caused little damage. Shares of Tokyo Electric Power Co., the operator of the March 11 earthquake-damaged Fukushima nuclear plant, jumped 23.5%. Fellow utility Tohoku Electric Power Co. which said Friday it had found water leaks at its Onagawa nuclear facility and after it was forced to temporarily switch to an emergency diesel generator to power the cooling system at its Aomori nuclear plant also erased early losses to finish 0.8% higher.

Fast Retailing Co., the operator of the Uniqlo casual clothing chain, was another major gainer, rising 7.3% after the company raised its profit outlook for the full business year ending in August. Oil stocks gained after the front-month Nymex crude-oil futures contract hit a new two and a half year high Friday. Cnooc Ltd. climbed 0.2% in Hong Kong and Cairn India Ltd. added 0.7% in Mumbai. Gold miners also tracked the precious metal's price higher, with Shandong Gold-Mining Co. adding 0.7% in Shanghai and Zhaozin Mining Industry Co. gaining 1% in Hong Kong.

Base metals

Base metals closed higher across the board on the London Metal Exchange Friday, driven mainly by a weak U.S. dollar and hopes of strong Chinese metal demand despite recent monetary tightening measures, although some industry participants warned that, with the focus so firmly on the macro picture, the metals could be vulnerable to a fall-back if conditions change.

At the PM kerb close, flagship three month copper traded 2.1% higher at $9,874 a metric ton, charting a 5.4% rise since the beginning of the week, its steepest weekly ascent since Dec. 3 last year. Crude oil futures topped $112 a barrel for the first time in 2 1/2 years Friday, as a falling dollar provided the latest spark in oil's unrelenting rise. Oil prices have moved higher in six of the last seven sessions, spurred by signs of stalemate in Libya and concerns that violence in other oil producing nations could curtail tightening global supplies.

An influx of investors continue to look towards commodities in an effort to hedge against inflation, despite signs from some central bankers that easy-money policies are nearing an end. Light, sweet crude for May delivery settled $2.49, or 2.3%, higher at $112.79 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange rose $3.98 to $126.65 a barrel, the highest close since July 2008, and just $17 lower than the all time settlement high.

Gold futures continued their march toward $1,500, and silver topped $40 for the first time since 1980 amid tensions over U.S. fiscal policy, continued euro-zone debt jitters and concern global inflation could get out of hand. The most-actively traded gold contract, for June delivery, rose $14.80, or 1%, to settle at a record $1,474.10 a troy ounce on the Comex division of the New York Mercantile Exchange. Nearby April gold added $14.90, or 1%, to a front-month record $1,473.40. Comex May silver rose $1.056, or 2.7%, to settle at $40.608 a troy ounce, the highest close for a most-active contract since Jan. 21, 1980.

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