While you were sleeping: US economic data picks up, Treasuries fall

Friday 19th June 2009

The US economy showed signs of life, with an unexpected pick-up in jobs data, a turnaround in the factory sector and a rise in an index of leading indicators.

The index of US leading economic indicators rose for a second month in May, gaining 1.2% after rising 1.1% in April, according to the New York-based Conference Board. The index of coincident indicators, a gauge of current economic activity, declined 0.2%, the smallest fall since October.

The Federal Reserve Bank of Philadelphia’s general economic index rose to a nine-month high this month. The index improved to minus 2.2 from minus 22.6 in May on a pick-up in orders and sales.

The number of people collecting unemployment insurance fell by 148,000 to 6.69 million in the week ended June 6, the biggest decline since November 2001.

US Treasuries fell on optimism the recession in the world’s biggest economy may be abating and as investors prepare for US$104 billion of sales of new bonds next week.

The 10-year note yield rose 16 basis points to 3.84. The Treasury Department said it will sell US$40 billion in two-year notes, US$37 billion of five-year notes and US$27 billion of seven-year notes next week.

US stocks rose, snapping a three-day slide after the rosier economic data. The Dow Jones Industrial Average gained 0.7% to 8555.60 and the Standard & Poor’s 500 Index climbed 0.8% to 918.37. The Nasdaq Composite declined 0.02% to 1807.72.

Bank of America advanced 4.9% to US$12.90, leading the Dow higher, and JPMorgan Chase gained 4.4% to US$34.17. Kraft Foods rose 3.9% to US$25.85 and Merck gained 3.6% to US$25.65.

Aluminium producer Alcoa Inc. climbed 2.8% to US$10.78.

Caterpillar Inc. dropped 2.1% to US$34.08 after the manufacturer of heavy earth-moving equipment said sales at retail dealers in North America fell 57%.

Lions Gate Entertainment Corp. jumped 7.9% to US$5.63 after billionaire investor Carl Icahn lifted his stake in the film studio to 16.9%.

The euro fell against the dollar after failing to breach a key level of US$1.40. The European currency slipped 0.4% to US$1.3883 and rose 0.6% to 134.24 yen. The greenback strengthened 1% to 96.64 yen.

The euro strengthened to 1.5140 Swiss francs from 1.5008 amid speculation the Swiss central bank had intervened to drive its currency lower.

Governor Jean-Pierre Roth has said he would act against any irrational rise in the Swiss franc and traders may be testing the governor’s resolve.

Copper futures for September delivery rose 0.4% to US$2.278 a pound on the New York Mercantile Exchange.

The World Bank said that China’s economy will expand 7.2% this year, stronger than the 6.5% pace it forecast in March, reflecting the Beijing’s 4 trillion yuan stimulus package. China is the biggest consumer of copper.

Crude oil rose after an attack on a Royal Dutch Shell Plc pipeline in Nigeria and after U.S. Energy Department figures showed US stockpiles shrank.

A pipeline at Shell’s Forcados terminal was damaged by explosives, according to the Movement for the Emancipation of the Niger Delta. US stockpiles fell by 3.87 million barrels to 357.7 million last week.

Crude oil for July delivery rose 0.8% to US$71.58 a barrel on the New York Mercantile Exchange.

European stocks rose as investors took hope from the stronger US economic data, betting the global slump may be abating.

The Dow Jones Stoxx 600 rose 0.6% to 205.64, the first gain in five days.

ING Groep surged 8% after Goldman Sachs Group rated the lender a “buy.” HeidelbergCement AG rose 17% after concluding a refinancing agreement.

The UK’s FTSE 100 edged up 0.1% to 4280.86 and Germany’s DAX 30 rose 0.8% to 4837.48. France’s CAC 40 rose 1% to 3194.06.

Businesswire.co.nz

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