Wall Street: U.S. stocks were unable to hold onto gains and banks led the market lower in the final stages of trading. Investors in bank stocks were spooked after Moody’s Investor Service said commercial property values plunged by 21% in March and also predicted further declines. After the report, the S&P 500 Banks Index dropped 4.4%. The DOW lost 29.23 points to close at 8,474.85. The S&P 500 lost 1.58 points but closed above the 900 level at 908.13.
Europe: European stocks rose to their highest level in 4 months on Tuesday as traders continue to speculate that the worst of the global recession is over and that the financial sector is recovering. The German DAX gained 107 points (2.22%) while London’s FTSE added almost 36 points (0.8%). Europe’s markets were pulled higher after news broke that three major banks, Goldman Sachs, JP Morgan and Morgan Stanley are preparing to repay the TARP funds.
Asia: Asian equity markets moved higher overnight as investors continue to be optimistic the global recession is nearing an end. Japan’s Nikkei gained 251 points (2.78%) as the strong moves seen in yesterday’s U.S. session carried over into Asia. Australian stocks closed 2.2% higher on renewed optimism that the global economic recession is nearing an end.
Financial Sector: In trade on Tuesday the XLF, the financial sector ETF, dropped 0.03 points (0.16%) to trade at 12.26. It moved lower on light volume; 118m ETF's changed hands, well below the ten day average of 208.5m. Equity markets moved slightly higher, overall, on Tuesday and the recent trend has seen the financial lead the way. However, today, it was the financials leading the way lower. Speculation that three large banks are preparing to pay back TARP funds moved the market early but disappointing housing starts capped equity gains.
Treasuries: Treasuries moved very little on Tuesday after housing starts dropped unexpectedly in April. Ten year yields held near Monday’s levels after Minneapolis Fed President Gary Stern said the economy should return to healthy growth by mid 2010. The ten year yield rose one basis point to 3.25%. The Federal Reserve will buy government securities tomorrow and will resume its debt auctions next week.
Crude oil: Oil prices gained slightly on Tuesday, closing just below the $60 a barrel level as U.S. refinery problems increased supply fears. Crude oil for June delivery gained 0.62 (1.05%) to $59.65. The July contract rose 51 cents to $60.10
Gold Bullion: Gold prices rose on Tuesday in response to a weaker dollar which boosted gold’s appeal as an alternative investment. Gold futures for June delivery rose $5 to $926.70 an ounce. So far this year, gold has gained 4.8%.