World Market Overview 22/03/2011

US markets

The Dow Jones Industrial Average climbed back above 12000, boosted by a major telecommunications deal and a jump in energy stocks as oil prices leapt. The Dow Jones Industrial Average surged 165 points, or 1.4%, to 12023 in late afternoon trade. The measure hadn't been above 12000 in intraday trading in a week. AT&T, the second-largest U.S. mobile carrier, added 1.1% after saying it was buying T-Mobile USA from Deutsche Telekom for $39 billion in cash and stock, a move that would create the nation's largest wireless carrier.

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The deal helped push up shares of Verizon Communications 1.7%, while rival Sprint Nextel, which would be last among the national wireless carriers by subscriber base if the deal goes through, sank 15%. Tower operating company American Tower fell 8.5%, as analysts predicted it could get hit by potential streamlining of cellular sites. But investors said the deal generated confidence in corporate America at a time when overseas headlines have spurred major declines.

The Nasdaq Composite gained 1.86 to 2686. The Standard & Poor's 500-stock index climbed 1.3% to 1296, led by its energy sector. Crude-oil prices settled above $102 a barrel as conflict in Libya escalated.

The U.S. and its allies launched new missile strikes against Moammar Gadhafi's forces Monday. In Yemen, President Ali Abdullah Saleh's control unraveled precipitously Monday as most of his military commanders joined the political opposition calling for his ouster. Among energy companies, drilling contractor Rowan added 4.9%, driller Noble Corp. rose 4.3% and petroleum refiner Tesoro gained 4%. Investors said stocks weren't feeling as much pressure from higher oil prices as they did at the emergence of turmoil in Libya.

European markets

European equities ended with strong gains Monday, led by the telecommunications sector, which rallied on news that Deutsche Telekom AG will sell its T-Mobile USA unit to AT&T Inc. The Stoxx Europe 600 index gained 1.8% to close at 272.33, partially bouncing back from a 2.8% loss last week, its worst weekly performance since early July. In Germany, shares of Deutsche Telekom rose 11.3%, boosting the DAX 30 index, which closed with a gain of 2.3% at 6,816.12. Deutsche Telekom will sell T-Mobile USA to AT&T Inc. in a $39 billion cash and stock deal. The deal news inspired a 3.6% gain for Vodafone Group PLC and a 2.4% rise for BT Group PLC. Vodafone owns a 45% stake in U.S-based wireless provider Verizon Wireless through a joint venture with Verizon Communications Inc. The telecom story also pushed the French CAC 40 index 2.5% higher to close at 3,904.45, with shares of France Telecom SA gaining 3.5%. Also in Paris, shares of Electricite de France SA rose 5.2%. Over the weekend, EDF Energy's Chief Executive Vincent de Rivaz said that the company's plans for U.K. nuclear power plants will proceed despite the crisis in Japan. London's FTSE 100 index rose 1.2% to settle at 5,786.09. The index was helped by shares of Weir Group PLC, which rose 4.5%, and Rolls-Royce Group PLC, which gained 3.5%, both on broker upgrades. In other M&A news, shares of Dutch bank ING Groep rose 3.6% on a media report that General Electric Co. is among companies that have expressed interest in a merger with or takeover of ING's U.S. online bank.

Asian markets

Asian markets rose Monday against a backdrop of caution over heightened geopolitical concerns in the Middle East and North Africa, as energy stocks climbed on higher oil prices and on optimism over progress in resolving Japan's nuclear crisis. Hong Kong's Hang Seng index rose 1.7%, South Korea's Kospi added 1.1%, China's Shanghai Composite rose 0.1% and Taiwan's Taiex advanced 0.9%. India's Sensex fell 0.2%. Japanese markets were shut for Vernal Equinox Day. Crude oil prices edged higher after allied forces launched air strikes on Libya, under a United Nations resolution to halt attacks on civilians involved in a month long uprising against the regime of Moammar Gadhafi, who vowed in return to wage a long war. A number of energy stocks outperformed in the region, with PetroChina gaining 3.3% in Hong Kong and 1.6% in Shanghai; and Cairn India advancing 1.9% in Mumbai trade. In China, banks and property developers rose as investors looked past a well-anticipated increase in lenders' reserve requirement ratio of 0.50 percentage point Friday by the People's Bank of China. Shares of Industrial & Commercial Bank of China climbed 1.9% and China Construction Bank rose 0.6% in Shanghai; in Hong Kong, they added 1.7% and 1%, respectively. Property developers also climbed, with China Vanke rising 1.2% in Shenzhen, Poly Real Estate Group adding 1% in Shanghai and China Overseas Land & Investment jumping 3.8% in Hong Kong.

Base metals

Base metals closed mostly lower on the London Metal Exchange Monday after U.S. data showed existing home sales tumbled, rekindling fears that a recovery in the housing market of the world's largest economy is still struggling to gain traction. Sales of previously occupied homes in the U.S. fell 9.6% in February to a seasonally adjusted annual 4.88 million significantly below market expectations. Economists surveyed by Dow Jones Newswires had expected home sales to decline 3.9% to an annual 5.15 million. LME three month copper, which had earlier recorded at an intraday high of $9,593.25 a metric ton, closed at $9,395/ton, down 1.2% on Friday's PM kerb close. The red metal is widely used for electrical wiring and plumbing in residential construction. Crude futures settled higher Monday as airstrikes by the U.S. and its allies in Libya raised concerns about extended oil-supply disruptions amid growing regional tensions. Light, sweet crude for April delivery settled $1.26, or 1.3%, higher at $102.33 a barrel on the New York Mercantile Exchange after briefly trading above $103 earlier in the session. Brent crude on the ICE futures exchange ended $1.03 higher at $114.96 a barrel. The U.S., France and others moved swiftly to support rebels in eastern Libya after the U.N. authorized intervention Thursday in order to protect civilians. The allies unleashed more than 100 cruise missiles over the weekend against forces loyal to Moammar Gadhafi. Pro-regime forces halted their push on the rebel-held city of Benghazi, and traders now fear an extended struggle between the two groups could result in long-term disruptions to Libya's oil supplies, pushing up crude prices. Intensified fighting in Libya and the continuing nuclear crisis in Japan raised demand for gold as a refuge investment Monday. The most actively traded contract, for April delivery, rose $10.30, or 0.7%, to settle at $1,426.40 a troy ounce on the Comex division of the New York Mercantile Exchange. Thinly traded front-month March gold also gained $10.30, to $1,426.20.

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