Oil prices dropped $US4 a barrel to around $US134 a barrel, the Dow rose by just over half a per cent as blue chips held firm, but tech stocks fell and the broader market was flat.
Nasdaq fell despite Apple revealing details of its new Iphone, the Dow held with McDonald’s reporting stronger than expected sales in may, especially from global markets like Europe and Australia.
The US dollar firmed from Friday’s sharp fall and the Australian dollar lost 1.5 US cents from its high yesterday to end around 94.90 US cents in late New York trading.
The Dow finished 70 points higher thanks to the blue chips and that drop in oil, but it wasn’t convincing.
Lehman Brothers, the 4th largest US investment bank, brought forward its 2nd quarter results and revealed $US2.8 billion in losses after $US3.7 billion in write downs. It then raised $US6 billion in new capital but the shares fell another 12% to go with a similar fall last week.
Our market looks like heading for a rocky opening and there will be some nervous investors who watched yesterday without any ability to trade. It could open around 100 points down from Friday’s fall
Oil prices eased in Asian and European trading, but Asian stockmarkets fell, Europe also fell last night. British producer price inflation hit a 20 year high on the back of that oil price surge in May, and US petrol prices topped $US4 a gallon for the first time.
European sharemarkets ended lower for a fourth consecutive day.
Airlines like BA and Ryanair were hit by the oil price surge and banks were undermined by more reports of write downs, especially in the wake of the early announcement of Lehman Brothers’ big loss and huge billion capital raising.
As well, the European Central Bank said in its latest financial stability report that financial markets were more strained than six months ago as conditions had worsened.
Even though oil eased, the Stoxx 600 Index lost 0.5% and is now at a near two month low. The index has slumped 23% from a six-year high a year ago.
National indexes retreated in 15 of the 18 western European markets. But France’s CAC 40 added 0.1% and Germany’s DAX rose 0.2%.
London’s FTSE 100 slipped 0.5% (it was off 1.5% at one stage) after a report today showed UK producer prices increased at the quickest pace in 20 years in May.
It was another eventful day after oil prices spiked to record highs on Friday of more than $US139 a barrel, before a late easing to end at $US138.54, a record close.
That left oil prices up $US16 a barrel last week alone: a record rise by any measurement in dollar terms, but nowhere near as big as the boost in 1973 after the Yom Kippur war when prices rose 500%.
Yesterday July crude traded at $US136.66 in after-hours electronic trading on the New York Mercantile Exchange. Oil hit $US139.12 on June 6 after the US unemployment rate grew the most in two decades and Morgan Stanley forecast oil may reach $150 within a month.
That was after Asian trading saw oil down to $US137.59 per barrel, a fall of around $US1 a barrel which increased in European morning trading.
Oil kept falling in European and US trading to end around $US13435 a barrel, down more than $US4 on the day.
Asia-Pacific markets sank following Friday’s plunge on Wall Street as investors worried about the state of the US economy after the poor employment figures and the surge in oil prices.
Hong Kong, mainland China and Australia were closed for holidays but Japan, Korea, India and New Zealand all lost over 1%.
The Nikkei 225 slumped 2.1% to 14,181.38, the biggest decline since April 14, led by export-related stocks.
In Seoul, shares lost 1.3% to 1,808.96, in Singapore; shares were down 2.1% to 3,081.19 while New Zealand shares lost 1.5% to 3.496.497.
In London producer prices surged last week.
Official figures showed that manufacturers’ selling prices have risen at the fastest rate in more than 20 years over the last 12 months following a 1.6% rise in May over April.
That saw annual producer price inflation rise from 7.6% to 8.9% – the highest since comparable records began in 1986, and a possible signal that the beleaguered Bank of England might be forced to lift interest rates, rather than cut them to accommodate the property and retail slump.
The figures showed the UK manufacturers input inflation also hit a record in May: thanks to rises in the cost of oil, food and imported materials. Annual input price inflation rose from 24.3% to 27.9%, according to the UK figures.
And, according to the American Automobile Association (the AAA) US petrol prices topped $US4 a gallon Sunday for the first time ever:
The average retail price of petrol in the US rose above $4 a gallon for the first time on Sunday, according to a daily survey by the AAA motoring organization.
According to the AAA, Sunday’s average price of $US4.005 for a gallon of regular gasoline was 9.3% above a month earlier and 29.4% up on the same time last year.
Prices will go higher after Friday’s surge.
And in after hours trading US corn prices hit a record $US6.73 a bushell thanks to poor weather and planting conditions across the American corn belt. That was after a record was hit on Friday on the Chicago Board of Trade. Corn finished up 6 cents at $6.5725 in official CBOT trading, one of the few commodities to end higher.
Copper and gold both fell a touch.
