While you were sleeping: Stocks rally, greenback sinks, US industrial output gains

Thursday 17th September 2009

Stocks rallied on Wall Street amid optimism the recession in the world’s biggest economy has ended. The US dollar sank to a new 12-month low and commodity prices advanced.

The Dow Jones Industrial Average gained 1.1% to 9791.71 and the Standard & Poor’s 500 rose 1.5% to 1068.76. The Nasdaq Composite gained 1.5% to 2133.15.

General Electric jumped 6.30% to US$17.00, leading the Dow higher. Alcoa Inc., the aluminium producer, rose 3.4% to $14.47.

Helping stocks rally, a Federal Reserve report showed US industrial production rose 0.8% last month, adding to a 1% gain in July. Automakers helped lead the advance, as the government’s cash-for-clunkers incentive scheme encouraged them to ramp up output.

Labor Department figures showed inflation is still relatively tame, with the Consumer Price Index rising 0.4% in August. Gasoline prices jumped 9.1%. From a year earlier, consumer prices fell 1.5%.

The industrial output data comes a day after Federal Reserve chairman Ben Bernanke said the recession is probably over and billionaire investor Warren Buffett said he was buying shares.

The US dollar fell to the lowest level against the euro in a year as optimism about a return to growth spurred investors to sell the greenback in favour of higher-yielding assets.

The dollar fell to $1.4714 per euro from $1.4658 while the yen weakened to 133.74 per euro from 133.47. Japan’s currency strengthened to 90.89 per dollar from 91.05, and earlier touched a six-month high 90.13.

The Dollar Index, which tracks the greenback against a basket of six currencies, fell 0.3% to 76.27, the lowest since September 2008.

Copper had the biggest advance in three weeks after industrial production rose in the US, the world’s second-biggest consumer of the metal after China.

Copper futures for December delivery gained 3.2% to US$2.9365 a pound on the New York Mercantile Exchange, the biggest advance since August 21.

Gold rose as investors speculated a return to global economic growth will stoke demand for the precious metal as a hedge against inflation.

Gold futures for December delivery rose 1.4% to US$1,020.20 an ounce on the New York Mercantile Exchange and earlier reached a six-month high of US$1,023.30.

Crude oil futures rose after the US Energy Department said inventories fell last week. Stockpiles of crude fell by a greater-than-expected 4.73 million barrels to 332.8 million, according to the department.

Crude oil for October delivery rose 2.2% to US$72.49 a barrel in New York.

European stocks rallied, adding a second day of gains as rising commodity prices lifted raw materials producers. The Dow Jones Stoxx 600 Index rose 1.4% to 244.82. Among regional benchmarks, the UK’s FTSE 100 climbed 1.6% to 5124.13, Germany’s DAX 30 rose 1.3% to 5700.26 and France’s CAC 40 rose 1.6% to 3813.79.

BHP Billiton, the world’s biggest mining company, gained 3.2% and Rio Tinto, the third-largest, rose 2.9%.

Renault SA, France’s second-biggest automaker, rose 5.5% after its Japanese partner Nissan Motor said sales in China this year will beat its estimate. PSA Peugeot Citroen rose 3.7% and Porsche gained 4.5%.

The UK’s Tullow Oil surged 9.2% after announcing a deep water discovery at its 10%-owned Venus well off the coast of Sierra Leone.

Businesswire.co.nz

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