Despite a weak performance for June, all three US market indexes gained for the quarter.
The Dow average jumped 8.5 per cent, the S&P 500 rose 5.8 per cent and the NASDAQ was7.5 per cent higher.
For the week, the Dow rose 0.4 per cent, the S&P 500 was half a per cent higher and NASDAQ gained 0.6 per cent.
A look at the ten major S&P 500 sectors reveals that utilities, which is interest rate-sensitive,fell 5.3 per cent this month and was also the only leading group to record a negative return, down 1.1 per cent, for the second quarter. That tells you interest rates have become a problem, despite the apparent easiness.
June was a tough month for financials stocks after the rise in rates in May and the sharp spike on June 13.
The financials sector of the S&P 500 is the only leading sector currently negative for the year:down 2 per cent.
Bear Stearns, the investment bank with two troubled hedge funds, fell 2.8 per cent to $US140 on Friday. Home builders and real estate stocks also performed weakly in June as US housing industry problems worsened.
And in perhaps the most telling share price move last week, units of buyout giant, Blackstone Group, dropped more than16.5 per cent to $US29.27, compared to the $US31 issue price a week earlier and a high of just over $US38 a share.
The drivers of the performance in the broader S&P 500 were energy and information technology.
The two sectors rose 1.7 per cent and 0.6 per cent in June respectively and14.3 per cent and 10.2 per cent respectively in the June quarter.
The ASX 200 gained 4.7 per cent in Australia for the June quarter but lost 0.6 per cent in June.
It was the fourth quarter in a row the key index for fund managers was up. It has only had one down quarter since the March quarter of 2003.
The All Ords lost 0.5 per cent in June but was up 5.6 per cent in the June quarter.
Over the financial year the ASX 200 was up 23.7 per cent in straight terms (more than 28 per cent including dividends). The All Ords rose around 25 per cent for the year.
Most analysts do not expect another year like 2006-07, but it must be said that similar sentiments were heard a year ago.
…………
Oil prices stood out in commodity markets,
ICE July Brent crude hit $US71.60 a barrel before easing to end at $US71.18 a barrel on Friday, unchanged over the week.
But Nymex August West Texas Intermediate rose 83 US cents to $US70.40 a barrel, up 1.9 per cent last week and the first time it had topped the $US70 mark in nine months.
That was more down to a sharp narrowing of the discount between Nymex WTI and ICE Brent crudes to less than $US1 a barrel: a month ago it was over $US6.
That narrowing is because the oversupply of crude at Cushing, Oklahoma, where WTI crude is deliverable under Nymex contracts, is falling as more refineries get their petrol making units back on line and draw down on crude stocks. US refinery utilisation rose 1 per cent last week.
So the move upwards in Nymex WTI was mostly for technical reasons and both markets will now react evenly to market-moving events, such as the weekly release on Wednesdays of figures for US oil and product stocks.
One thing of interest: with the summer driving season this month, concern is now switching to stocks of heating oil ahead of the autumn and winter.Stocks of heating oil are currently 40 per cent behind where they were a year ago. Watch for this to start driving oil prices.
…………………
But the big surprise was the June plantings report from the US Department of Agriculture.
It showed that US farmers had planted far more corn than previously estimated.
The USDA said farmers planted 92.888m acres of corn this year, the most since 1944 and significantly higher than all other estimates.
Corn prices fell sharply, taking down the prices of wheat and other grains, but soybeans and other oil seeds rose strongly on news of a sharper than forecast cut in plantings.
On the Chicago Board of Trade,July corn fell 7.5cUSc to $US3.5075 a bushel and wheat was down 26.75USc to $US5.97 a bushel.
The sharp increase in corn acreage will cut the soybean crop.
The USDA forecast of 64m acres for soybeans was significantly below estimates which ranged between 66m to 69m acres.
Soybean prices soared with the futures contracts for August 2007 finishing 39.50USc higher at $8.8175 a bushel.
Wheat prices rose but then fell, even though the USDA cut its estimate for spring wheat acreage.
The USDA said 2007 spring wheat acreage totalled 13.144m acres, below the consensus forecast of 13.899m acres and 11.8 per cent below last year's 14.899m acres.
Corn prices fell 17 per cent over the last two weeks.
By the USDA's figures, analysts say the US corn could harvest a record 13 billion bushels of corn compared with demand of 12.5 billion forecast by USDA.
That could mean higher than forecast stocks and the easing of price pressure caused by the surge in demand from ethanol makers.
That could take some of the speculative pressure out of grain prices, but the situation in wheat remains problematic with the dry weather in Eastern Europe and mixed news on plantings and harvesting in the US, still the major factors.
……………..
Meanwhile there was some life in copper which reached a three week high in New York on the back of falls in world stocks.
Chinese stock fell 5.6 per cent to 90,617 metric tons late last week while London Metal Exchange stocks fell 1.4 per cent to 114,700 tons on Friday.
Comex September copper futures rose 2.3 US cents,$US3.4505/lb.Copper's gain so far this year is now20 per cent.
Copper rose 2 per cent last week in New York.
Copper supplies seem to be a bit tighter than previously thought after the International Copper study grou
