Tuesday, October 21, 2008
20-Oct World Daily Markets Briefing
| by: ADVFN Newsdesk Forex FOREX-Dollar dips as risk aversion eases, Bernanke awaited NEW YORK - The dollar and the yen eased on Monday as ongoing action to rescue the global banking system cooled extreme risk aversion, but losses were capped amid skepticism about stock market gains being sustained. Analysts said there was a reluctance to aggressively sell the two currencies, which have benefited from the credit turmoil, ahead of Federal Reserve Chairman Ben Bernanke's testimony at a House of Representatives Budget Committee hearing. Continuing efforts to bail out banks around the world, including the Dutch government's cash injection into ING and South Korea's pledge to pump funds into its financial system, pushed interbank dollar lending rates lower and helped to quell some of the panic that has gripped markets since September. Stocks on Wall Street were poised to open higher after a rise in European shares, which in turn took a cue from stronger Asian stocks as investors chose not to focus on a looming global recession. Recovering stock markets also damped the rush for dollars. "The critical thing is the market wants to hear Bernanke say the worst is behind us and that's why there is pre-selling ahead of that, everybody is very skeptical because he tends to be very dour whenever he testifies," Boris Schlossberg, director for research at GFT Forex in New York. "That tends to have a very negative impact on equities and that's why you are not seeing the high yielders really rallying as they did earlier in the session because a lot of the enthusiasm has disappeared already." Bernanke's testimony is scheduled to start at 10 a.m. (1400 GMT). In New York morning trade, the euro was up 0.1 percent at $1.3422, after hitting a session high of $1.3530 earlier in the day. The dollar also fell against the British pound, slipping 0.5 percent to $1.7378, while higher-yielding currencies like the Australian and New Zealand dollars posted strong gains. Against the Japanese yen, the dollar was flat at 101.63 yen US Stocks at a Glance US STOCKS-Wall St opens up amid credit market thaw NEW YORK - U.S. stocks opened higher on Monday as investors took signs of further easing of interbank lending rates as signaling that credit markets are beginning to loosen up, tempering recession worries. The Dow Jones industrial average was up 54.08 points, or 0.61 percent, at 8,906.30. The Standard & Poor's 500 Index was up 9.05 points, or 0.96 percent, at 949.60. The Nasdaq Composite Index was up 18.42 points, or 1.08 percent, at 1,729.71. HEADLINE STOCKS-U.S. stocks watch on Oct 20 NRG ENERGY the largest nuclear power operator in the United States, made an unsolicited offer to buy NRG. Exelon shares slipped 2.7 percent to $53.04 in premarket trade. For details, see HASBRO INC MATTEL INC Hasbro beat Wall Street quarterly profit forecasts, helped by its Star Wars and Playskool line of toys, but rival Mattel Inc posted a profit that missed expectations amid a squeeze from higher costs. Mattel shares declined 3.6 percent to $13.94 before the bell, while Hasbro shares were unchanged from their Friday close of $30.12. HALLIBURTON CO The stock rose more than 6 percent to $19.40 before the bell on Monday after the oil services company posted a quarterly operating profit above Wall Street's forec asts. EXXON MOBIL CORP CHEVRON CONOCOPHILLIPS The stock of Exxon rose more than 2 percent to $69.45 before the bell on Monday after the stock was raised to "outperform" from "perform" at Oppenheimer & Co, according to theflyonthewall.com. ConocoPhillips and Chevron also received upgrades. HORMEL FOODS CORP The company, which makes Jennie-O Turkey and Spam lunch meat, cut its 2008 earnings forecast on Monday, citing the impact of the global financial crisis on its investment trust, greater cost pressures and an unfavorable product mix. The stock ended at $33.94 on the NYSE. CIRCUIT CITY The U.S. electronics retail chain is considering closing at least 150 stores and cutting jobs, the Wall Street Journal said citing people familiar with the company. The s tock ended on Friday at $1.02 on the NYSE. Europe share European stocks rise; commodities, financials help LONDON - European shares rose on Monday as commodity stocks tracked higher crude and metal prices and investors bought financial shares in the hope that the banking sector crisis may ease. At 0912 GMT, the FTSEurofirst 300 index of top European shares was up 2.6 percent at 917.72 points. It gained 4.2 percent on Friday, but has lost 39 percent this year, hit by fears the credit crisis may trigger a global recession. Energy shares added most points to the index as oil stocks gained, tracking crude that rose 2.5 percent on expectations that OPEC could cut output at an emergency meeting this week to lift prices that have lost more than 50 percent in three months. BP, Royal Dutch Shell, gas producer BG Group and Tullow Oil added between 3.2 and 8 percent. But the focus remained on financials. European Central Bank President Jean-Claude Trichet pledged to do whatever it takes to restore confidence to financial markets. He told France's RTL radio on Sunday that the ECB was working very closely with the U.S. Federal Reserve to solve the financial crisis. "There are signs of Libor easing a little bit, particularly in U.S. dollars. We expect to see quite a strong fall in U.S. dollar Libor rates today, which is helping banking stocks," said David Buik, partner at BGC Partners, referring to the London interbank offered rate. The interbank cost of borrowing dollars fell again in Europe on Monday and dollar and euro interest rate swap spreads narrowed as dealers said banks were lending dollars to European banks on Friday rather than simply hoarding cash. Bank-to-bank euro and sterling lending rates were also indicated lower, notably three-month sterling, c oinciding with the Bank of England's announcement it will implement immediately reforms to its money market operations and bank lending facilities. Several financial stocks were up. ING surged 22.8 percent after it became the latest European bank to seek government funding, agreeing to a 10 billion euro ($13.5 billion) Dutch cash injection as well as scrapping executive bonuses and its year-end dividend. Fortis jumped 19 percent, Lloyds TSB gained 3.7 percent, Royal Bank of Scotland rose 3.4 percent, Barclays was up 3 percent and UniCredit was up 1.5 percent. But Societe Generale dropped 9.7 percent and Dexia shed 4.8 percent. Britain's FTSE 100 index was up 1.6 percent, Germany's DAX rose 1 percent, and France's CAC added 1.2 percent. Despite a recovery in equity markets, investors remained cautious. China's weaker-than-expected growth and South Korea's $130 billion financial bailout package also highlighted that no country was immune from the global crisis. Germany's cabinet on Monday approved strict conditions for banks that make use of its 500 billion euro ($674 billion) rescue package, including limits on managers' salaries, bonuses and severance. "Whilst we are clearly not out of the woods yet, investors are looking for anything to hang their hats on," said Chris Hossain, senior sales manager at ODL Securities. Governments around the world have pledged $3.3 trillion to remedy the worst financial crisis in decades. Miners were up as copper and zinc edged higher, while precious metals prices also firmed. BHP Billiton and Rio Tinto rose between 0.1 and 6.8 percent. Ericsson, th e world's biggest mobile network maker, rose 20.7 percent after it posted stronger-than-expected third-quarter earnings, benefiting from heavy network traffic and showing no sign yet of damage from the financial turmoil roiling world markets. But French water and waste management group Veolia fell 19 percent after it cut its outlook for its investments and operating cash flow in 2008 due to the economic slowdown. Novartis AG's third-quarter net profit rose 32 percent to $2.08 billion, helped by strong sales of its top-selling blood pressure drug Diovan and just behind forecasts. But the company shares were down 2.3 percent. Asia at a Glance Hong Kong shares close sharply higher on China policy hopes HONG KONG - Share prices closed sharply higher, snapping a three-day losing streak, on hopes that China will take fresh measures to boost its economy after the nation's growth slowed to its weakest pace in five years. China Mobile was up more than 7.5 pct ahead of its third-quarter results, due later in the evening. Sinopec surged more than 10 pct and PetroChina gained over 8 pct on hopes that China may approve a hike in refined oil product prices as inflation eased further on the mainland. The Hang Seng index closed up 768.8 points or 5.28 pct at 15,323.01, off a low of 14,691.79 and a high of 15,472.68. Turnover was 53.75 bln hkd. China announced today that its gross domestic product (GDP) grew 9.0 pct year-on-year in the third quarter to September, slowing from a 10.6 pct pace in the first quarter and 10.1 pct in the three months to June. For the first nine months of the year, growth stood at 9.9 pct. The third-quarter expansion marks the lowest growth since April-June 2003. Meanwhile, China's consumer inflation eased to 4.6 pct in September from 4.9 pct in August, while producer price index growth eased to 9.1 pct from 10.1 pct. The data came on the heels of Premier Wen Jiabao's comments late last week that the central government will launch a series of measures to maintain stable economic growth. Planned measures include a cut in transaction fees to support home purchases, higher export-tax rebates for labor-intensive sectors and value-added machinery and electronics producers, he said. Yuen said that despite today's strong showing on the local bourse, there are doubts if the gains will hold. Mainland oil refiners posted sharp gains on expectations that easing infl ation provides room for Chinese authorities to ease price caps on refined oil products. Sinopec jumped 0.55 hkd or 10.56 pct to 5.76, while PetroChina--which has both upstream and oil refining business--surged 0.49 hkd or 8.28 pct to 6.41. Oil producer CNOOC was up 0.26 hkd or 4.53 pct at 6.0 as crude oil prices rebounded on expectations of an output cut by OPEC. Mainland property developers posted strong gains on hopes that Beijing will take further measures to lift China's sagging real estate market. The official China Daily reported that the central government endorsed local government measures to revitalize the property markets. China Overseas Land & Investment surged 0.99 hkd or 12.25 pct to 9.07, Guangzhou R&F climbed 0.36 hkd or 6.99 pct to 5.51, Agile Property gained 0.26 hkd or 9.67 pct at 2.95 and Shimao Property w as up 0.41 hkd or 10.51 pct at 4.31. Local property developers also outperformed after a recent sell-off. Cheung Kong jumped 5.0 hkd or 6.99 pct to 76.50, Sun Hung Kai Properties gained 5.35 hkd or 8.5 pct at 68.30, Henderson Land was up 2.0 hkd or 7.69 pct at 28 and Sino Land surged 0.80 hkd or 10.67 pct to 8.30. China Mobile was up 5.0 hkd or 7.56 pct at 71.10 ahead of its third-quarter results. "I am not bearish on China Mobile for the near term as its new users addition remains strong," said Dennis Poon, research head at South China Securities. China banks were mostly higher despite a slowdown in their earnings growth. ICBC rose 0.27 hkd or 7.48 pct 3.88, Bank of Communications was up 0.08 hkd or 1.5 pct at 5.40 and Bank of China was up 0.15 hkd or 6.3 p ct at 2.53. China Construction Bank was up 0.17 hkd or 3.86 pct at 3.67 after it said its net profit for the first nine months of the year was up 48.07 pct year-on-year. It marks a slowdown from the 71 pct growth registered in the first half. China CITIC Bank was down 0.03 hkd or 1.1 pct at 2.70. The bank said it expects over 130 pct growth in net profit for the nine months to September, slowing from the first-half profit growth of 162 pct. Among large-caps, HSBC was up 1.80 hkd or 1.71 pct at 107, Hong Kong Exchanges and Clearing up 3.50 hkd or 4.27 pct at 85.50 and China Life gained 1.65 hkd or 7.32 pct at 24.20. Fashion apparel retailer and exporter Esprit Holdings was down 1.70 hkd or 3.98 pct at 41 on weak sales outlook and a deteriorating global economy. Dah Sing Financial and unit Dah Sing Banking slumped after consumer complaints about the unit's sales of Lehman Brothers invest ment products were referred to Hong Kong's Securities and Futures Commission for investigation. Dah Sing Financial slumped 3.0 hkd or 13.64 pct tot 19 and Dah Sing Banking lost 0.78 hkd or 14.13 pct at 4.74. Ping An Insurance was up 1.10 hkd or 3.1 pct at 36.60 after it said it expects a net loss for the first nine months of 2008 under Chinese accounting standards due to losses on its investment in Belgian-Dutch financial group Fortis. But the mainland insurer expects a net profit under international accounting standards. The Hang Seng China Enterprises index ended up 433.6 points or 6.19 pct at 7,441.13. The Bombay Stock Exchange's benchmark Sensex rose 247.74 points or 2.48 percent to 10,223.09, aided by a rally in the software and banking constituents. No. 1 software company Tata Consultancy Services Ltd. (TCS) topped the gainers, surging 9.47 percent to 497.15 rupees followed by the other three software constituents in the benchmark gauge. The National Stock Exchange's 50-share S&P CNX Nifty gained 48.45 points or 1.58 percent to 3,122.80, as there were three advances for every two shares that declined. Labels: ADVFN NewsDesk |
posted by Matbank at 12:24 AM
