Friday, October 17, 2008
16-Oct World Daily Markets Briefing
| by: ADVFN Newsdesk Forex FOREX-Dollar up vs yen, recession concerns rise The dollar rose against the yen on Thursday on falling share prices as the possibility that the banking sector may be salvaged did little to quell worries that the global economy is teetering on the verge of recession. The dollar rose 1.0 percent to 100.65 yen, recovering from a seven-month low of 97.88 yen touched last week. Earlier in the day, the pair climbed as high as 100.76 yen. Against a basket of six major currencies, the U.S. currency eased 0.2 percent to 82.089, having climbed as high as 82.840 and hovering in range of 83.191 hit on Friday -- the highest since June 2007. The dollar was generally supported even after figures showed that U.S. retail sales last month dropped the most in more than three years, while Federal R eserve Chairman Ben Bernanke issued a dour assessment of the world's biggest economy. The euro rose 0.4 percent to $1.3513, having earlier fallen to $1.3347 and towards a 1-1/2 year low of around $1.3257 hit on Friday. It gained 1.3 percent versus the yen to 136.00 yen but was still not far off the three-year lows of 132.25 yen set last Friday. The Swiss franc slipped to its lowest level of the year against the dollar after the Swiss government said it would take a near 10 percent stake in UBS as the bank and its rival Credit Suisse raise funds to help them survive the ongoing banking turmoil. The dollar climbed as high as 1.1488 francs, its strongest since late 2007, but the euro was little changed against the Swiss currency and hovered in sight of a four-ye ar low hit last week. Some analysts said the Swissie was supported against the euro on the belief the move to partly nationalise UBS strengthened the franc's status as a safe-haven currency. Meanwhile, the Hungarian forint steadied against the euro after the country's central bank struck a deal with the ECB to borrow up to 5 billion euros to boost liquidity in its markets and unfreeze its bond market. The Swedish crown hit a record low to the euro at 10.1450 crowns as the currency was dogged by worries about the economy, given rising import prices and limited room for rates cuts. Data showing rising unemployment bolstered such concerns. US Stocks at a Glance US STOCKS-Wall Street gains in volatile opening NEW YORK - U.S. stocks rose in volatile action after the open on Thursday, as investors were encouraged by signs of further thawing in the credit markets, but worries about a prolonged U.S. recession persisted. The Dow Jones industrial average rose 98.92 points, or 1.15 percent, to 8,676.83. The Standard & Poor's 500 Index was up 11.40 points, or 1.26 percent, at 919.24. The Nasdaq Composite Index added 22.23 points, or 1.37 percent, to 1,650.56. US Jobless Claims -16K to 461K in Oct 11 Wk; 470K Expected WASHINGTON - Initial claims for U.S. state unemployment fell 16,000 to 461,000 in the Oct. 11 week, the previous week's level, the Labor Department reported Thursday morning. Forecasts in a Market News International survey of economists had centered on 470,000 new claims. The previous week's initial claims level was revised to 477,000. A Labor Department analyst said eight states required estimates for the week and that recent hurricanes were estimated to have boosted Texas claims by 12,000 this week. Among the state reports, some hurricane impact was reported in Texas in the Oct. 4 week, adding 12,000 claims, but no impact was noted in Louisiana. The seasonal factors expected a 10.4% rise in the latest week's claims and instead got just 6.6%. Unadjusted claims rose 28,052 to 451,776 in the Oct. 11 week. There were 306,519 unadjusted claims in the comparable week a year ago. The four-week moving average for initial claims in the Oct. 11 week was 483,250, up from the previous week's revised 482,500. The level of continuing claims rose 40,000 to 3,711,000 in the Oct. 4 week, seasonally adjusted. The seasonally adjusted insured unemployment rate was 2.8% in the Oct. 4 week, up a tenth from the previous week. The unemployment rate among the insured labor force is roughly half that reported monthly by the Labor Department because claims are approved for the most part only for job losers, not the job leavers and labor force reentrants included in the monthly report. Europe share Europe shares down, energy and financials weigh LONDON - European shares fell by midday on Thursday, as worries about a global economic slowdown weighed heavily on commodities and crude prices slumped to less than half the peak levels of just three months ago. By 1047 GMT the FTSEurofirst 300 index of top European shares was down 2.6 percent at 879.96 points, having dropped as much as 5.6 percent earlier. But the rise from the day's lows was a dead-cat bounce, according to Ronald Stoeferle, strategist at Erste Bank. "There's still panic out there. It's difficult to know what to expect or what will make the market recover," he said. The benchmark index fell 6.5 percent on Wednesday after its advances of 10 percent on Monday and 3.1 percent on Tuesday. It has lost 42 percent this year. p; Among financials, the focus was on UBS and Credit Suisse after news that Switzerland's two largest banks will receive billions of francs of emergency funding from the Swiss government and others to shore them up against the financial crisis. Credit Suisse was up 2.4 percent after falling as much as 10 percent earlier and UBS traded 1.9 percent higher, having lost nearly 9 percent. Royal Bank of Scotland said financial sector rescue packages put together by governments and central banks would serve as a shock absorber but were unlikely to prevent most euro-area economies from falling into recession next year. Deutsche Postbank fell as much as 12 percent on market talk that the deal under which Deutsche Bank would acquire a controlling stake in Postbank may fail, traders said. Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC-40 were down between 2.5 and 3.7 percent. Energy stocks lost ground as the U.S. crude oil price fell more than 3 percent to trade near $72 a barrel, compared with $147 in early July. The Brent price fell more than 4 percent to less than $68. "The timing, speed and extent of any potential global economic recovery are very difficult to pin down," Credit Suisse said, cutting its 2009 crude oil price forecast to $75 a barrel from $110. Total shares fell 6 percent, Royal Dutch Shell lost 4.3 percent and BP lost 3 percent. Credit Suisse lowered its price targets for several oil stocks, including the three above. It also cut its target for Austria's OMV to 41 euros from 50. OMV shares fell 12 percent. Steelmaker ArcelorMittal's shares fell 5 percent, and the DJ EuroStoxx basic resources index was down 3.8 percent. "Given the scale of financial distress, we face a period of massive deleveraging which will seriously hit the global economy," Landsbanki Kepler said in a note on ArcelorMittal, forecasting zero growth for Europe and North America in 2009 and 2010. Insurer Old Mutual fell 11 percent following a price target cut by Deutsche Bank on Wednesday. Nokia was down 2 percent, after the world's top cellphone maker reported weaker-than-expected third-quarter sales and profits. The Finnish group reported third-quarter earnings per share of 0.29 euros, down from 0.40 euros a year ago, missing the average forecast of 0.31 euros in a Reuters poll of 37 analysts. Portugal Telecom fe ll 5.7 percent after Deutsche Bank initiated with a "hold" rating. It warned investors to beware of dividend risk. It said higher-than-average gearing plus the soaring cost of debt means the company can no longer cover dividend with domestic cash flow. Dutch mail company TNT NV saw its shares fall 7.6 percent after it said it expects trading conditions to worsen in its key express delivery unit in Europe in the fourth quarter due to the financial crisis, hurting its sales. Asia at a Glance Hong Kong shares close down 4.8 pct as global recession fears mount HONG KONG - Share prices closed sharply lower, with the key index shedding 4.8 pct, as fears grew that the global economy will slip into recession despite government bailouts of banks. A bigger-than-expected fall in US retail sales sparked worries that weakened consumer spending there will drag the economies of export-dependent Asian nations. Exporters, shipping firms and commodity producers led the decline on fears that they will be hit hardest by a global economic downturn. China banks tumbled after China Merchants Bank flagged a slowdown in earnings growth. Air China slumped over 12 pct after the mainland carrier warned of a net loss for the nine months to September. The Hang Seng index closed down 767.78 points or 4.8 pct at 15,230.52, off a low of 14,578.54 and high of 15,230.52. Turnover was 64.33 bln hkd Among exporters, Li & Fung tumbled 1.62 hkd or 9.57 pct to 15.30, handset maker Foxconn shed 0.24 hkd or 7.16 pct at 3.11 and clothing retailer Esprit Holdings fell 1.70 hkd or 3.74 pct to 43.80. In the shipping sector, China COSCO fell 0.60 hkd or 11.76 pct to 4.50, Sinotrans Shipping slipped 0.14 hkd or 9.59 pct at 1.32 and China Shipping Development plunged 1.97 hkd or 25.06 pct to 5.89. Among commodity plays, Angang Steel lost 0.67 hkd or 12.81 pct at 4.56, Chalco was down 0.34 hkd or 9.34 pct at 3.30 and Jiangxi Copper shed 0.68 hkd or 12.19 pct at 4.90. In the China financial sector, China Merchants Bank fell 1.30 hkd or 7.69 pct to 15.60, Bank of China was down 0.20 hkd or 7.19 pct at 2.58 and ICBC slipped 0.34 hkd or 8.19 pct at 3.81. Indian shares closed 2 percent lower, after sliding 7 percent earlier in the day, as investors covered their short positions and domestic insurance companies picked stocks at lower levels. The markets opened weak and declined further in early trade, tracking a broad sell off across the Asian indices, which fell as on the back of a steep decline on the Wall Street, over growing concerns of a severe recession ahead. The Bombay Stock Exchange's benchmark Sensitive Index closed down 227.63 points or 2.11 percent at 10,581.49, after it almost broke the key 10,000-point resistance level, at its intra-day low of 10,017.80 points. The National Stock Exchange's S&P CNX Nifty ended 69.10 points or 2.07 percent lower at 3,269.30. Breadth among the 30 Sensex equities improved over the day, with 14 advances and 16 declines. Aditya Birla Group controlled aluminium producer Hindalco Industries Ltd. fell the most, sliding 12.15 percent to 69.75 rupees. The country's biggest listed private company Reliance Industries Ltd. tumbled 122 rupees, or 8.03 percent, to 1,397.25 rupees and no.1 engineering firm Larsen & Toubro Ltd. slipped 7.55 percent to 825.75 rupees. Mobile phone company Reliance Communications Ltd. topped the gainers, soaring 9.8 percent to 258.90 rupees, followed by top property developer DLF Ltd., whose shares surged 8.25 percent to 324.90 rupees. Nine of the 13 BSE sector indices declined, led by the oil & gas index as it slid 5.57 percent. The realty index rose the most, up 5.15 percent. In the broader market, 1,733 decliners outnumbered 833 advancers on a volume of 292.4 million shares. Among the 50 shares that the Nifty tracks, three shares declined for every advance. Reliance Communications topped the Nifty gainers too, while majority state-owned aluminium producer National Aluminium Co. Ltd. (NALCO) fell the most. Shares of Nalco plummeted 14.86 percent to 283.55 rupees on the NSE, where 618.2 million shares changed hands. Labels: ADVFN NewsDesk, Forex Analysis |
posted by Matbank at 12:31 AM
