Tuesday, October 28, 2008
28-Oct - World Daily Markets Briefing
| by: ADVFN Newsdesk Forex FOREX-Yen retreats broadly as global stocks rebound LONDON - The yen retreated from recent 13-year highs against the dollar on Tuesday as stock markets rebounded and risk aversion ebbed, with the possibility of official intervention also weighing on the currency. In tandem with equity gains the yen dropped across the board, particularly against currencies such as the euro and the high-yielding Australian dollar which have taken a battering recently as investors' wariness of risk reached extreme levels. "The share gains have helped some of the removal of negative sentiment in forex markets," Investec economist David Page said. "This has led to some retracement in the yen against the dollar as well as a wider basket of currencies". The yen was further pressured by a Kyodo New s Agency report that the Bank of Japan is set to cut Japan's economic growth estimate for the 2008/09 fiscal year to 0.3 percent from the current 1.2 percent. At 1230 GMT, the dollar was up 2.7 percent against the yen at 95.35, moving away from a 13-year low of 90.90 yen struck on Friday, according to Reuters data. The euro was up 3.3 percent at 119.72 yen. The euro struck a 6-1/2 year low of 113.61 yen on Monday. The single currency also rose 0.7 percent against the dollar to $1.2549. Among the higher yielding currencies that have been pummelled recently, the pound rose 1.2 percent to $1.5721 and the Australian dollar jumped 3.8 percent to $0.6251. The Reserve Bank of Australia intervened in Asian trade for a third day to prop u p the Australian currency, which has lost more than 35 percent against the U.S. dollar since peaking in July. The respite for stock markets and the yen's fall, however, were seen as a temporary pause from recent price action as the spectre of a prolonged global recession was expected to keep investors in risk-averse mode. "There's no sense that the underlying trend of dollar strength and yen strength is set to change," said Daragh Maher, deputy head of Calyon global foreign exchange research in London. Traders said the yen is likely to test a 13-year peak against the dollar sooner or later if Japanese investors, who still have lots of overseas assets, decide to dump them and repatriate their proceeds. Distressed stock market prices and the yen's rise succeeded in getting Group of Seven economic powers to warn against excessive yen volatility on Mon day. This was seen as opening the way for central banks to intervene if necessary. But this looked less likely after French Economy Minister Christine Lagarde said on Monday any intervention on the yen would be a purely Bank of Japan undertaking, a move which many believe would be ineffective. "Until I actually see the Bank of Japan intervene then I am afraid the trend is intact and I don't see them in until we test their resolve (which I think we will at 90.00) at some point," IDEAGlobal senior strategist Maurice Pomery said in a note to clients. Meanwhile, analysts believe attention will soon turn back to the prospest that global central banks will again get together to cut interest rates in a bid to stave off a deep global recession. Bank of England Deputy Governor John Gieve said on Tuesday that international autho rities need to be ready to act again if necessary. Meanwhile, the U.S. Federal Reserve is seen cutting rates at its two-day meeting starting on Tuesday, while European Central Bank President Jean-Claude Trichet on Monday said the bank could cut rates at its policy meeting next week. US Stocks at a Glance US STOCKS-Market extends gains, Dow jumps 4 pct NEW YORK - U.S. stocks extended gains on Tuesday and the Dow briefly rose more than 4 percent, as investors snapped up beaten-down shares. Hopes of an end to Boeing Co's strike sent the planemaker's stock up more than 9 percent. The Dow's underpinning also came from a rebound in shares of energy companies, with Exxon Mobil up more than 5 percent after rival BP posted a record profit. The Dow Jones industrial average .DJI was up 320.66 points, or 3.92 percent, at 8,496.43. The Standard & Poor's 500 Index was up 32.77 points, or 3.86 percent, at 881.69. The Nasdaq Composite Index was up 56.15 points, or 3.73 percent, at 1,562.05. Stocks were higher after a report said U.S. consumer confidence plunged to a record low in October. Europe share Europe shares rise early on fresh VW surge, BP LONDON - European shares rose in early trade on Tuesday to break a five-day losing streak, helped by a surge in Volkswagen and sharp gains in heavyweight oil group BP after quarterly profits jumped. At 0955 GMT, the FTSEurofirst 300 index of leading European shares was up 2.1 percent at 833.00 points, and had been as high as 839.86. The index has lost 21.6 percent in October, hurt by a credit crisis and recession worries. Volkswagen was up 64 percent, following its 146 percent surge on Monday. Short sellers piled into the stock to sew up their speculative positions after Porsche bought up nearly all VW's remaining free float. BP rose 4.2 percent after it reported a 148 percent rise in third-quarter replacement cost profit, at $1 0.03 billion, boosted by higher oil prices. Total, ENI, and Royal Dutch Shell were up between 0.3 and 3.1 percent. "It's no real surprise that bargain-hunters are coming into these markets, despite the fact that expectations for the economy are tumbling and the outlook on the corporate front is gloomy," said Henk Potts, strategist at Barclays stockbrokers. "There's too much bad news priced into these markets. Long-term investors can look through the dark clouds ... and can see the cheap valuations." BG Group was up 2 percent after launching a A$5.6 billion ($3.4 billion) friendly takeover bid for Australia's Queensland Gas Co Ltd(QGC) as it tries to secure gas to boost its position in Asia's lucrative liquefied natural gasmarket. Most miners were hi gher as metals prices in London and Shanghai recovered after early falls, bouncing off lows on the back of losses by the dollar ahead of a U.S. central bank meeting later in the day. London Metal Exchange copper for delivery in three months rose 0.75 percent to $4,030, having dipped almost 5 percent earlier. BHP Billiton, Rio Tinto, and Xstrata were up between 3.3 and 6.8 percent. But Eurasian Natural Resources Corp. and Kazakhmys were down 5.9 and 4 percent respectively after the Kazakh government said the two companies would reduce output due to the global economic turmoil. Later in the session, the U.S. Federal Reserve starts a two-day meeting expected to cut the fed funds rate -- now at 1.50 percent -- by at least a further 50 basis points. "That should set the tone for the Bank of England and the ECB to cut rates," said Potts of Barclays. "The inflation picture has improved." Britain's FTSE 100 was up 2.1 percent, Germany's DAX was up 9 percent, boosted by Volkwagen, and France's CAC-40 was up 0.3 percent. Aviva surged 10.8 percent after the insurer said it had had no discussions with the UK government about capital support and reported a 12 percent rise in sales for the nine months to September. Its rival Aegon was up 0.9 percent after saying that the Dutch government would provide 3 billion euros capital. The company said it will scrap its final 2008 dividend, as it reported a third-quarter loss of 350 million euros. Terms of the injection are nearly identical to the deal between the Dutch government and finan cial group ING announced last week. ING was one of the biggest losers in the index on Tuesday, down 8.9 percent, after Fitch cut its outlook to "negative" from "stable". Other banks that fell included Deutsche Postbank, down 9.7 percent after JP Morgan slashed its price target to 16.5 euros from 52.3 euros while maintaining a "neutral" rating. French bank Societe Generale was down 2.2 percent despite moving to reassure investors after a sharp fall in its share price on Monday, saying it was sticking by its profit forecast and had no bad surprises in its market operations. Spain's biggest bank, Santander, was up 2 percent after posting a 5.5 percent rise in net profit for the first nine months to September, underpinned by robust recurrent earnings from its core retail b anking business. Asia at a Glance Asian market Summary The Nikkei .N225 gained 459.02 points to 7,621.92. It earlier fell as much as 2.3 percent to 6,994.90, its lowest since 1982. It is down 32 percent so far this month and has lost half its value since the start of this year. The broader Topix rose 5 percent to 784.03 after falling 3 percent at one stage. Trade was active on the Tokyo exchange's first section, with 3.2 billion shares changing hands, compared with last week's daily average of 2.4 billion. The Korea Composite Stock Price Index ended at 999.16 points, off the day's peak of 1,012.73 points but well up from the morning low of 901.49 points. The KOSPI has fallen 31 percent on the month to be down 47 percent on the year as investors ignored repeated financial support moves from the South Korean government and a total one percentage point cut in domestic interest rates during October. "Despite the ongoing concerns about economies and such, investors are slowly getting the idea that shares at the current levels are affordable. Also gains in regional markets helped," said Kim Seong-joo, a market analyst at Daewoo Securities. The benchmark Shanghai Composite Index closed up 48.47 points or 2.81 pct at 1,771.82, bouncing back from a 25-month intra-day low of 1,664.93 points in morning trading. The index had lost 12.7 pct in the previous five trading days. Turnover rose to 39.75 bln yuan from 32.21 bln yuan yesterday. The Shanghai A-share Index was up 51.04 points or 2.82 pct at 1,861.47, while the Shenzhen A-share Index rose 11.08 points or 2.23 pct to 508.42. The Hang Seng index closed up 1,580.45 points or 14.35 pct at 12,596.29, off a low of 11,133.94. It marked the biggest one-day percentage gain for the index since Oct 29, 1997, when it surged 18.82 pct. Turnover was 66.05 bln hkd. TAIPEI - Share prices closed firmer as purchases by government-related funds and some bargain-hunting helped the market recover from steep early losses driven by margin calls and recession fears. The weighted index closed up 33.10 points or 0.76 pct at 4,399.97, off a low of 4,110.09 and high of 4,425.90. Turnover was 71.99 bln twd. Today's intraday low was the lowest level for the index since the 4,108.67 recorded on May 2, 2003, when the region was gripped by SARS outbreak. Labels: ADVFN NewsDesk |
posted by Matbank at 11:46 PM
