September 22, 2020

Wall Street Higher After News of Bin Laden’s Death

Investors also took in a couple of strong earnings reports, some big corporate mergers and the latest economic report, which showed that manufacturing in the United States continued to expand in April, but at a slower pace.

The Dow Jones industrial average was 54.04 points, or 0.4 percent, higher while the broader Standard Poor’s 500-stock index added 6.20 points or 0.5 percent. The technology heavy Nasdaq gained 12.68 points or 0.4 percent.

Markets in Asia and Europe also were generally higher. The Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 0.3 percent. The CAC 40 in Paris rose 0.2 percent and the DAX in Frankfurt rose 0.5 percent. London markets were closed for a bank holiday.

The dollar was mixed. The euro rose to $1.4834 from $1.4806 late Friday, while the British pound slipped to $1.6671 from $1.6706. The dollar rose to 81.29 yen from 81.20 yen

The Japanese and South Korean markets were already 1 percent higher before President Obama announced that American forces had killed Bin Laden in Pakistan.

By the close the Nikkei 225 index had gained 1.6 percent and the Kospi by 1.7 percent. This took the Nikkei to 10,004,20 points, the first time it closed above 10,000 points since the devastating earthquake and tsunami that struck the country on March 11.

Still, compared to the enormous political and psychological significance of Bin Laden’s death, the stock market reaction was relatively muted.

“News of the death of Osama Bin Laden has had a limited impact on regional asset prices,” analysts at Royal Bank of Canada summed up in a note on Monday.

The news about Bin Laden comes at the start of a week that culminates with the release of the latest retail sales numbers on Thursday and April’s employment report on Friday. Before the markets opened, the Chrysler Group reported its first quarterly profit since going through bankruptcy reorganization in 2009, as the company sold more cars at higher prices. Chrysler said it earned $116 million in the quarter, after losing $197 million in the period a year ago. Revenue grew 35 percent, to $13.1 billion, while sales were up 18 percent.

On the economic front, the Institute for Supply Management, a trade group of purchasing executives, said its index of manufacturing activity dipped to 60.4 points in April but remained above 60 for a fourth month. That was down from 61.2 in March and 61.4 in February, the fastest expansion in nearly seven years. A reading above 50 signals growth.

Investors also took in a couple of significant acquisitions on Monday. Teva Pharmaceutical Industries said on Monday that it had agreed to buy the biopharmaceutical company Cephalon for $6.8 billion, a deal unanimously approved by the boards of the two companies. And Arch Coal said that it would buy International Coal Group in a cash deal worth $3.4 billion that would create one of the world’s largest coal producers.

Some of the sharpest reactions to the news of Bin Laden’s death were in the commodities markets.

Oil prices initially fell but turned higher after trading opened in New York. Benchmark crude for June delivery rose 46 cents to $114.39 a barrel.

Many analysts cautioned, however, that Bin Laden’s death could stoke, rather than ease, worries about oil supplies and global security in the longer run if it leads to retaliatory attacks.

“This is a positive development in the campaign against terrorism,” Jonathan Ravelas, chief market strategist at Banco de Oro Unibank in Manila told Bloomberg News. “In the last 10 years, Bin Laden’s presence has been a serious threat to global stability. The flip side is this could be followed by retaliation activities from his supporters.”

Gold, which also initially fell, also turned high in New York trading, rising $3.60 to $1,560 an ounce. The precious metal, which is seen as a safer investment and tends to rise during times of rising inflation and global unrest, has been hitting successive record highs in recent weeks.

Silver prices dropped more than 10 percent on Monday, a declined attributed to a decision by the CME Group, which is the parent of the Chicago Board of Trade, to increase the margins for futures trading on silver.

A commodities analyst at Commerzbank in Frankfurt, Carsten Fritsch, said the rule change, which took effect after business Friday, had made speculating in silver less attractive by requiring investors to tie up more capital while chasing potential gains.

The price fell because with the higher margin requirement and a widespread sense that silver was overvalued, investors who bought early were selling to lock in gains while those who bought recently were selling to limit losses, Mr. Fritsch said. Silver is still up 45 percent on the spot market this year, the best performance of any commodity, he said.

In India, the Sensex index closed 0.7 percent lower amid widespread expectations that the Indian central bank will once again raise interest rates on Tuesday in a bid to tame rising inflation. Most other stock markets in the region, including Singapore, Hong Kong and mainland China, were closed for a public holiday.

David Jolly contributed reporting.

Article source: http://www.nytimes.com/2011/05/03/business/03markets.html?partner=rss&emc=rss

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