Trade Deficit Boosts Dollar and Bonds

Market Update Analysis:

Author: Elena Todorova
123jump.com
Last Update: 12:31 PM EDT June 08 2007

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U.S. stock market averages moved modestly higher, as investors turned to bargain hunting after recent weakness, with concerns about the outlook for interest rates still weighing. Some positive sentiment was generated by a notable decline by the price of oil. Shares of Royal Dutch Shell traded in the U.S. were among the leading gainers in the oil group, rising 1%. At the same time, gold stocks posted weakness amid a continuous drop by the price of gold.

Shares of Vodafone Group slid 0.5%. The world largest mobile-phone company rejected a proposal from Efficient Capital Structures to return as much as 38 billion pounds, or $75 billion to shareholders.

Gold and oil

Crude oil for July delivery fell 79 cents, or 1.2%, to $66.14 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for July settlement declined $1.05 cents, or 1.5%, to $70.17 a barrel on the ICE Futures exchange. Gold traded in London at $656.75, down from $667.80 on Thursday. Silver opened in London at $13.39, down from $13.64.

Currencies

U.S. dollar rose against other major currencies in European trading Friday morning. The euro traded at $1.3363, down from $1.3432 late Thursday. The British pound traded at $1.9659, down from $1.9771. The dollar bought 121.30 Japanese yen, up from 121.11.

5:30AM NY:4:30PM Mumbai Sensex trades slightly lower in mid-afternoon session on Friday.

The Sensex on BSE is trading 38.83 points, or 0.27%, lower at 14,147.35 in late afternoon session.

The market-breadth improved from the morning session but is still negative with 1,230 stocks lower, 1,111 higher and 76 which are unchanged.

Economic news

The Indian rupee lost further to the dollar and is now past 41 rupees per dollar. The partially convertible rupee stands at 41.01, its lowest level since May 14.

Wholesale price inflation increased in the week ending May 26 to 4.85%, lower than 5.06% in the previous week and below estimates of 5.05% growth.

Advancers

Satyam has rallied 4.7% to Rs 504 and Hindalco has added 3.5% to Rs 159.
TCS and SBI have both rallied 1.8% to Rs 1,228 and Rs 1,384, respectively. ONGC has risen 1.5% at Rs 868. Wipro, Reliance Industries and Infosys are over 1% higher each at Rs 552, Rs 1,689 and Rs 1,973, respectively.

Decliners

Tata Steel has plummeted 3.5% to Rs 593. HDFC and ITC have lost 2.5% each to Rs 1,775 and Rs 151, respectively. Maruti and Ranbaxy have dipped over 2% each to Rs 743 and Rs 370 and Dr.Reddy''s and Tata Motors are lower 1.7% each to Rs 635 and Rs 665.

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