US Indices Up and Crude Oil Down

Posted on | July 8, 2009 |

Wall Street opened higher this afternoon, ahead of the start of the earnings season in the US, and after the International Monetary Fund (IMF) said the global economy is likely to expand by 2.5% next year – up 0.6% from the 1.9% growth rate estimated in April this year.

Earlier today, a report by the IMF had revealed that the global economy, led by India and China, is expected to grow by 2.5% in 2010. The Washington-based monetary fund, however, still expects the global economy to contract by 1.4% before the end of 2009.

‘The global economy is still in a recession but we’re inching towards a recovery. We have to continue with the fiscal, monetary, financial policies which we have put in place,’ IMF chief economist Olivier Blanchard said in a statement today. [1]

In the US, Wall Street opened in positive territory, with the Dow gaining 17.08 points (0.21%) to 8180.68 and the S&P 500 rising 1.98 points (0.22%) to 883.01 by 2.56pm (London time).

Mining giant Alcoa led the Dow higher today, rising 3.08% to $9.7 ahead of the release of its second-quarter earnings report. Alcoa has risen on the Dow despite estimates the company will report its third consecutive loss today as lower demand from automakers and the construction industry keep aluminium at about half of last year’s prices. [2]

Other top performers on the Dow today included DuPont, up 1.25% to $24.81; Walt Disney, up 1.24% at $22.81; Merck & Co, 1.17% higher at $27.94 and Home Depot, which had risen 0.98% to $22.62.

Losers on the other hand included Microsoft, Intel, General Electric, McDonald’s and 3M Co, all of which were down between 0.27% and 1.15% at 2.56pm (London time).

At home, the FTSE 100 was up 23.57 points (0.56%) to 4163.43, while the FTSE 250 was down 56.44 points (0.77%) at 7262.07. Mining heavyweight BHP Billiton topped the FTSE leaderboard today, rising 1.5% to 1319.5p. Other positive performers included RSA Insurance Group, up 1.3% to 117.2p; GlaxoSmithKline, up 1.26% to 1083p; Cobham, 1.13% higher at 179p and Next, which rose 1.05% to 1534p.

On the flip side, L&G, Aviva, Fresnillo, British Land and Prudential were all down between 4.24% at 6.31% at 2.56pm (London time).

Elsewhere crude oil prices slid for the sixth consecutive day, making this the longest losing streak since December 2008, ahead of the release of the crude oil inventories report in the US today. WTI Crude oil futures slid 1.3% to $62.11 per barrel, while Brent Crude oil futures had fallen 1.11% to $62.53 per barrel.

Tomorrow, the Bank of England is expected to announce its interest-rate decision, with analysts widely speculating the MPC may raise its monetary purchase programme by £25 billion.

‘There is speculation the MPC could expand its purchases of gilts. Investor nerves ahead of the meeting may be weighing on the pound,’ analysts led by David Woo, London-based global head of foreign-exchange strategy at Barclays Capital, wrote in a research note today. [3]

[1] Source: Bloomberg News (8 July 2009)
[2] Source: Bloomberg News (8 July 2009)
[3] Source: Bloomberg News (8 July 2009)

By Anthony Grech, Research Analyst, IG Index.

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