Proactive investors

GMAC financing lifts North American markets

by Proactiveinvestors

Despite gloomy consumer confidence numbers and falling house prices, North American markets rose thanks to the lifeline by the Treasury Department to GMAC Financial Services LLC. General Motor’s (NYSE: GM) beleaguered financial arm is expected to receive $5 billion from the $700 billion bank rescue programme. GMAC has immediately loosened its credit for auto loans to bolster sales. Prior to the government bail out, GMAC has been rejecting vehicle financing applications. General Motors gained 5.6 percent to $3.80 while Ford Motor Co (NYSE: F) rose 3.15 percent to close at $2.29.

Otherwise, there was little to celebrate. The economic outlook remains bleak with both consumer confidence and housing prices making all time lows. The Consumer Confidence Index fell by 6.7 to 38 in December marking the lowest point since its introduction in 1967, and below the previous low of 38.8 in October. Job losses, falling asset prices, lack of access to credit and the likelihood of a long recession have all contributed to the reading. Meanwhile, the Standard & Poor's/Case-Shiller 20-city and 10-city housing indexes also fell by 18 percent and 19.1 percent respectively from October 2007, marking largest drops since their inceptions in 2000.

Boosted by the GMAC rescue package Dow closed 184 points higher at 8,668. S&P500 and NASDAQ also rose 21.2 points and 40 points to close at 891 and 1,550 respectively. Toronto also gained and TSX added 193 points to 8,831. The TSX Venture Exchange soared 30 points to 773. The Canadian dollar lost 0.17 cents to settle at 81.9 cents US.


Retail
Despite the drop in Consumer confidence US retail stocks held on. The US drugstore operator Walgreen Co (NYSE: WAG) gained 1.23 percent to $23.94 while CVS Caremark (NYSE: CVS) rose 4.04 percent to $28.33. Wal-Mart Stores (NYSE: WMT) dropped a meagre $0.06 to $55.05. J. C. Penny (NYSE: JCP) and Kohl’s Corp (NYSE: KSS) also gained 4.8 percent and 3.1 percent respectively to reach $187.69 and $34.80.

Energy
Despite heightened hostilities in Persian Gulf following Israeli attacks on Gaza oil continued to weaken. Light, sweet crude fell $0.99, to $39.03 a barrel on the New York Mercantile Exchange. Oil stocks gained however. Exxon Mobil Corp. (NYSE: XOM) rose just $0.57 or 0.73 percent to settle at $78.59 while Chevron Corp. (NYSE: CVX) added $1.83 to reach $73.38. ConocoPhillips (NYSE: COP) also gained 5 percent and Marathon Oil (NYSE: MRO) added $0.73 or 2.8 percent to $26.65. BP plc (NYSE: BP) gained$0.50 to close at $45.82. Petrohawk Energy (NYSE: HK) and Chesapeake Energy (NYSE: CHK) also added 3.7 percent and 0.84 percent to reach $15.42 and $15.65 respectively.

TSX energy sector also shrugged off the drop in oil prices and ended the day higher 2.1 percent. EnCana Corp. (TSX: ECA) rallied $2.01 to $56.41 while Suncor Energy (TSX: SU) soared 3.32 percent to $23.64. Husky Energy (TSX: HSE) recorded a marginal $0.81 gain to $29.87. Petro-Canada (TSX: PCA) however fell $0.59 to close $26.40. Canadian Natural Resources (TSX: CNQ) meanwhile rose $1.93 to close at $47.68. Oilexco (TSX: OIL) meanwhile remained flat at $0.89.

Metals
The gold bullion however fell $5.30 to US$870 an ounce on the New York Mercantile Exchange thus sending the TSX gold sector down 1.7 percent. Goldcorp Inc. (TSX: G) fell $1.21 or 3.14 percent to $37.29. Barrick Gold Corp. (TSX: ABX) fell 2.71 percent to $44.11. Kinross Gold (TSX: K) also fell 1.47 percent to settle at $22.17. In the US, Newmont Mining (NYSE: NEM) declined 1.7 percent to close at $40.02. AngloGold Ashanti (NYSE: AU) also fell 0.11 percent to settle at $26.57. Goldfields (NYSE: GFI) fell 2.54 percent to close at $9.59.

Financials
GMAC rescue package helped financials across the board and JPMorgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC) gained 4.1 percent and 2.3 percent to close at $31.01 and $13.24. Wells Fargo (NYSE: WFC) also gained $0.97 or 3.5 percent to $28.80 while Morgan Stanley (NYSE: MS) added 1.9 percent to reach $15.19. Citigroup (NYSE: C) rallied 3.5 percent to $6.80. Merrill Lynch (NYSE: MER) also rose $0.20 or 1.81 percent to $11.27.

Toronto financial stocks also benefited and TD Bank rallied 4.53 percent to close at $42.50 while Bank of Nova Scotia (TSX: BNS) rose $1.46 to $32.45. Royal Bank (TSX: RY) also added $0.61 or 1.7 percent to reach $35.49 while CIBC (TSX: CM) gained $0.57 to $49.75. Bank of Montreal (TSX: BMO) was almost flat at $30.90. National Bank (TSX: NA) meanwhile lost 2.71 percent to $30.88.

At the time of writing Asian stocks are on the rise helped by rising commodity prices. Both BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO) have gained over 3 percent midway through the trading.

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