Global Trading Wrap: Equity Markets Hold Steady Despite Weakness In Financials

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Wall Street: U.S. equity markets closed higher on Tuesday but the gains were limited as financial stocks weighed on the markets. The markets were encouraged by much better than expected pending home sales, the largest jump in over seven years. General Motors, which now trades on the Pink Sheets, dropped 20% despite news that GM has found a buyer for its Hummer unit. Ford climbed 4.6% as it continues to benefit from GM’s demise. Most financials traded lower on the day as companies continue to announce plans to raise capital through stock offerings to pay back the TARP funds. Bank of America was the exception, gaining 1.8%. The DOW gained 19.43 points to close on 8740.87. The S&P gained 1.92 points closing on 944.79, while the NASDAQ gained 8.12 points to close on 1836.80.

Europe: European stocks closed Tuesday’s trade mixed as auto stocks rose but financial shares dropped led by Barclays after Abu Dhabi sold more than 11% of its shares in the company. Barclays fell 13.5% on the day. Volkswagen gained 10% on hopes the company will benefit from majority shareholder Porsche finding an investor. BMW, Porsche and Fiat also posted gains. The German DAX gained 1.5 points, the CAC 40 lost 1.45 points while the U.K.’s FTSE lost 29 points.

Asia: Asian markets close mixed overall on Tuesday, rising early on the heels of the positive news of global manufacturing data, but investors seemed to become cautious on equities, and riskier assets in general, probably concerned about whether the financial markets can sustain the current pace. Overall, the positive news outweighed the General Motors bankruptcy filing as Japanese auto makers rose. Tech stocks climbed on hopes that the U.S. economy is recovering but shipping stocks fell after recent gains. The Japanese Nikkei gained 27 points while the Hang Seng fell 500 points.

Financial Sector: In trade on Tuesday the XLF, the financial sector ETF, lost 0.13 points (1.05%) to trade at 12.23. It moved lower on strong volume; 169.5m ETF's changed hands, just below the ten day average of 177.2m. Equity markets closed higher on Tuesday in a choppy session that saw the major indexes rise after the pending home sales data before retreating and moving lower midsession only to rally in the final hours of trading.
 
Treasuries: Ten year Treasury notes rose on Tuesday after yields surged yesterday to levels not seen in six months. Traders are speculating that the notes have fallen too fast. Yields on the ten year Treasury notes fell three basis points on Tuesday to 3.65%. Yields jumped 21% yesterday, touching 3.74%.
 
Crude oil: Oil prices continued to rise on Tuesday, gaining approximately 0.25%, and held above $68 a barrel. Strong U.S. pending home sales was instrumental in crude holding onto recent gains but traders are starting to profits, keeping the advances in check. Crude oil closed the day at $68.75 a barrel, gaining 0.17.
 
Gold Bullion: Gold prices only managed a small gain on Tuesday even though the dollar continued to drop against all of the other major currencies. Bullion gained $2.50 an ounce to close just below $983 an ounce. Gold prices have risen sharply lately and look set to challenge the $1000 an ounce level, especially if the dollar continues its steep decline.