US mkts down on weak jobless claims; Asia opens quite

The US markets ended down on the back of weak jobless claims numbers. UK rating outlook cut by S&P stoked concern about the US’ credit rating. Asian markets opened very quiet.

The US markets ended down on the back of weak jobless claims numbers. UK rating outlook cut by S&P stoked concern about the US’ credit rating.

The Dow Jones Industrial Average ended down 130 points or 1.5% at 8,292, after slipping 124 points or 1.47% from day’s high of 8,416. The S&P 500 Index fell 15 points or 1.7%, to 888.3, after dropping 16 points or 1.77% from day’s high of 904 and the Nasdaq Composite lost 32.6 points or 1.9%, to 1,695, after slipping 25 points or 1.45% from day’s high of 1,720.

Bill Gross: Investors fear that the United States is “going the way of the UK – losing AAA rating, which affects all financial assets and the dollar”

Alert: S&P’s yesterday cut its outlook on the UK’s AAA rating to “negative” from “stable,” nation faces 1 in 3 chance of AAA rating cut as debt approached 100% of GDP.

Asian markets opened very quiet. Straits Times was up 0.6%. Taiwan, Kospi and Hang Seng were up less than 0.5%. However, Nikkei and Shanghai were down less than 0.5%.

European markets ended down 2.7% on the S&P rating cut. CBOE VIX Index was up 8% at 31.35.

US economic news:

Continuing jobless claims climbed to a new record of 6.66 million. Initial claims for the week ending May 16 declined 12,000 at 631,000. Philadelphia Fed’s survey of manufacturing contracted in May for the eighth straight month.

Commodities:

Gold prices ended up 1.5% at $ 951.2/ounce. Crude oil was down 1.6% at $ 61/bbl. Base metals declined on the weak economic outlook. Copper was down 3.5% and Zinc fell 5%. Lead was down 5.8%. Baltic Dry Index gained 1.5% at 2,707. It hit a new 2009 high and was up 250% YTD, highest in eight months. Baltic Dry Index went up 51% this month and was still far below last year’s all-time high of 11,793 points.

Currencies:

US Dollex index was down 0.8%, lowest level in 2009 against a basket of currencies. It was down 3.2% week till date. USD was down 1% versus Euro at 1.3932. Dollar fell as government said it would sell a massive amount of new debt next week. Yen strengthened to 93.89 per USD, which is 9-week high after Finance Minister said that Japan isn’t considering currency intervention.

Global movers & shakers:

GM surged 32.4%, as GM’s finance arm, GMAC, will receive $7.5 billion from the Treasury & GM and the UAW have reached a tentative agreement. In base metal stocks, Rio Tinto was down 6.4%. BHP Billiton fell 5.5% and Alcoa lost 4.1%.

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