Wednesday, November 19, 2008
Nov-19 World Daily Markets Briefing
| by: ADVFN Newsdesk Forex FOREX-Yen broadly supported by economic fears LONDON - The yen strengthened broadly while the dollar steadied on Wednesday as deepening unease about the world economy put stock markets back under downward pressure. Growing concern over the U.S. auto industry, which is seeking billions of dollars in government aid, kept investors away from risky positions, pushing European shares roughly 1 percent lower. Trade in most major currencies was subdued following months of frenzied selling of risky assets as the credit crisis pushed the global economy towards recession. Extreme risk aversion has boosted the low-yielding yen and the dollar. Analysts saw more support for those currencies as markets wait to see whether a round of aggressive interest rate cuts by major central banks and plans for fiscal stimulus will help to take some of the sting out of the recession. "At the moment we're grappling between whether the response from global central banks will come through ... and when we will see fiscal policy announcements," said Stephen Koukoulas, strategist at TD Securities in London. At 1153 GMT the euro was little changed at $1.2640, having traded in a narrow range all day. Against the yen , it slipped 0.3 percent to 122.10 yen. The dollar was steady at 96.85 yen. Against a basket of currencies, it was barely moved around 87.014. Sterling rose 0.8 percent against the dollar and the euro, shaking off minutes from this month's Bank of England policy meeting that showed unanimity on cutting interest rates by a staggering 150 basis points, and that an even bigger cut had been considered. The higher-yielding Australian and New Zealand dollars fell around 0.7 percent against both the dollar and the yen. Economic underperformance, financial market weakness and asset deleveraging have boosted the yen and the dollar as investors cut back on carry trades, which play on interest rate differentials, to seek safety and liquidity. Data on Tuesday showed a total net inflow of $143.4 billion to the United States in September, the largest since early 2006. Still, some in the market say that sentiment for the U.S. currency may slump if desperate U.S. automakers are unable to secure an emergency loan from the government. Top executives at General Motors, Ford and Chrysler have warned that their industry was in serious trouble, but U.S. Treasury Secretary Henry Paulson on Tuesday reiterated his opposition to diverting funds from a $700 billion financial bailout programme to rescue Detroit. Some analysts argue that liquidation at one of the "Big Three" U.S. automakers would touch off a cascade of failures that would cost tens of thousands of jobs and make the economic downturn even steeper. But others warn that diverting funds of the $700 billion Troubled Asset Relief Program away from supporting the financial system could unleash even greater market and economic turmoil. "Without such (broad fiscally stimulative) action, we fear that the U.S. policy could lose credibility leading to eventual declines in the dollar," UBS strategists wrote in a note on Wednesday. Currency traders will also look to minutes from the last policy meeting of the Federal Reserve for clues about how deeply and how quickly interest rates are likely to be cut again. Wednesday's U.S. data includes the latest snapshot of the housing sector -- a root cause of the credit crisis -- and consumer price inflation. US Stocks at a Glance US STOCKS-Market flat as energy gains offset economic woe NEW YORK - U.S. stocks were little changed after the open on Wednesday as gains in energy and commodity shares offset diminishing prospects for a U.S. auto industry government rescue in a slumping global economy. The Dow Jones industrial average rose 45.00 points, or 0.53 percent, at 8,469.75. The Standard & Poor's 500 Index edged up 3.40 points, or 0.40 percent, at 862.52. The Nasdaq Composite Index moved up 3.52 points, or 0.24 percent, at 1,486.79. European Markets European shares down at midday; banks, pharmas fall LONDON - European shares were down 1.4 percent by midday on Wednesday, with banks and pharmaceutical sectors the biggest fallers, although HBOS was an exception on hopes that its acquisition by Lloyds TSB would go through. By 1143 GMT the FTSEurofirst 300 index of top European shares was down 1.4 percent at 833.53 points, having earlier touched a low of 828.84 points. Banks took the most points off the index, although stocks were mixed within the sector. HBOS gained 11.9 percent ahead of a meeting of Lloyds TSB shareholders to vote on the takeover deal and an associated government-backed recapitalisation plan. Traders said they saw the vote going through. But Fortis fell 8.5 percent after a brief initial rise after a Belgian court rejected a challenge by shareholders to the state-backed rescue of the group. Barclays was down 5.6 percent ahead of next week's vote by shareholders on its controversial capital increase plan. Meanwhile, HSBC, Banco Santander, BNP Paribas, UBS and Societe Generale were 3.4-8.7 percent lower. Heino Ruland, strategist at FrankfurtFinanz, said uncertainty over the U.S. bank's bailout plan was also affecting stocks in Europe. "No one knows how the bail out package will be executed. It looks like U.S. Treasury Secretary Henry Paulson is trying to shift the responsibility of spending the money to the new administration. It is already known that part of the money is not going to be spent as envisaged," said Ruland. Irish banks were higher after a newspaper report said the government was poised to inject money into banks and another paper said Ireland had held talks with foreign private investors over the banks. Anglo Irish Bank, Bank of Ireland and Allied Irish Banks rose 7.9-29.2 percent. The pharmaceutical sector also weighed heavily on the index. AstraZeneca lost 5.1 percent after the company confirmed that its rival Teva had gained an approval for a generic version of Astra's Pulmicort asthma drug. Commodities were under pressure after crude retreated 0.4 percent and copper fell back 1.7 percent. Royal Dutch Shell and Total were 0.7 and 1.8 percent lower, respectively. Mining groups Anglo American, Antofagasta, BHP Billiton, Lonmin, Kazakhmys, Rio Tinto, Vedanta Resources and Xstrata were down 2.8-9.7 percent. Across Europe, the FTSE 100 index was down 2 percent, Germany's DAX was 1.4 percent lower and France's CAC 40 was down 1.7 percent. On the upside, Experian was 10.9 percent higher after it posted an 8 percent jump in first half results and said third quarter revenue growth should also be sound. Reckitt Benckiser gained 3.4 percent after Citigroup started coverage of the group with a "buy" rating and 3,000 pence price target. Analysts said there could well be a stock market rally by year end. "In the short-term there could be a rally, but in the long term cash is king, and investors should buy defensive stocks," said Philippe Gijsels, strategist at Fortis in Brussels. "We're not too pessimistic for the rest of the year -- one should buy into this to capture a 10-15 percent upside," he said, saying that he saw markets finally bottoming out next year or possibly even later. Later in the session, investors will look at U.S. Consumer Price Index figures due out at GMT and U.S. October Housing Starts both due out at 1330 GMT. Economists in a Reuters survey expect a 0.8 percent fall in CPI compared with no change in September, while housing starts are forecast at a 780,000 annualized rate compared with a 817,000 rate in September. Asia Markets Glace ASIA MARKETS: Markets Mixed; Sinopec Surges On Possible Fuel-tax Proposal Asian stocks recovered from steep losses to trade mixed late Wednesday, with Shanghai's Composite surging 6.1% to lead regional gainers, as investors chased Sinopec shares on hopes that a new gasoline tax under consideration could herald market-based pricing for fuels. Other regional indexes traded lower, while India and the Philippines rose. Most declining markets pared back early losses in late trade, although the mood remained fairly downbeat amid evidence of further economic slowing in the region. Mitsubishi UFJ Financial Group ended 6.4% lower after the bank, Japan's largest, reported a 64% decline in fiscal first-half net income and said it would sell up to 1 billion shares in the next few months to strengthen its capital base. Japan's Nikkei 225 ended 0.7% lower at 8,272.22. South Korea's Kospi fell 1.9% to 1,016.82, and Australia's S&P/ASX 200 was off 0.7% at 3,499.60. Shanghai's Composite Index ended 6.1% higher at 2,017.47, recouping some of its more than 6% fall in the previous session. Shanghai-listed shares of Sinopec climbed by the daily 10% limit amid expectations a fuel levy the authorities are mulling may be the first step toward ending state pricing of gasoline. Such a move could help refiners and other oil companies fatten their profit margins. Hong Kong-listed shares of Sinopec (SNP) added 2.8%. In the China Daily report on Wednesday, citing a spokesman from the National Development and Reform Commission's Energy Research Institute, government officials viewed the current low level of oil prices as an appropriate time to introduce a new fuel tax. Existing toll-road and other transport charges would be rolled back when the new tax is unveiled, the report said, without specifying the timetable for introducing the new tax. Hong Kong's Hang Seng Index ended 0.8% lower at 12,815.80. Unemployment in the banking and shipping hub edged up to 3.5% in the three months ended in October, rising 0.1 percentage point from the third quarter, government data showed Tuesday. Asian stocks seemed to take few cues from a stronger session for stocks in New York Tuesday, where expectations-beating results from Hewlett Packard (HPQ) and Home Depot Inc. (HD) helped lift the Dow Jones Industrial Average (DJI) 1.8% to 8,424.75. "People are looking at soft economic growth globally, recession talk is still going around, and we still see stimulus packages which are a bit slow to be implemented in Asia," said Jurg Kiener, head of advisory firm Swiss Asia Capital in Singapore. Added Patrick Bennett, a foreign-exchange strategist with SocGen in Hong Kong, in a research note Wednesday: "Reports of slower domestic economic activity are starting to permeate Asian headlines, replacing what has previously been a dominance of attention on the woes in the U.S. and more recently Europe." Taiwan's Taiex was down 0.5% at 4,284.09. Singapore's Straits Times Index fell 1.1% to 1,673.23 and New Zealand's NZSX-50 fell 0.3% to 2,706.28. Kuala Lumpur's Composite was down 0.7%, Bangkok's SET fell 1.4%, and Jakarta's Composite fell 1.5%. India's Sensex was up 1.3% and the Philippines Composite added 1.9%. Shares in Mazda Motor were down 1.1% on news Tuesday that Ford Motor Co. (F) would sell cut its stake in the Japanese car maker to 13% from 33%, a deal that'll generate about $540 million for Ford. Mazda will buy back about a 7% stake from Ford for about $184.5 million, and the rest will be purchased by the Japanese automaker's business partners. Toyota Motor Corp.'s (TM) ended unchanged after the vehicle maker slashed its 2008 China sales target by 14% to 600,000 vehicles. Shares of Neptune Orient Lines Ltd. (NPTOY) fell as much as 1.9% in Singapore after the shipping line said Wednesday it will cut about 1,000 staff positions globally, as part of efforts to reduce costs. Shares of Woodside Petroleum fell 3%, leading a general fallback among the commodity producers following weaker industrial-metals and crude-oil prices. PetroChina (PTR) also logged gains in the wake of the fuel-tax talk; its Hong Kong-listed shares rose 0.9%. The December light sweet crude-oil contract fell to a 22-month low, closing at $54.39 a barrel Tuesday on Nymex, down 56 cents for the session. In electronic trading in late Tokyo the contract was down 6 cents at $54.33 a barrel. Commodities Platinum rises on mine closure, report; gold steady LONDON - Platinum held firm after rising as much as 3 percent on Wednesday after an industry report predicted demand could still rise and a mine closure triggered short covering, while gold was steady. Precious metals traded rangebound, keeping an eye on the currency markets, as the dollar inched up against a basket of currencies while falling oil prices capped possible gains of bullion. Platinum was trading at $829.00 an ounce by 1055 GMT after hitting a session high of $850 an ounce earlier and compared with $824.50 an ounce in New York late on Tuesday, when it gained around 2 percent. "Platinum has risen on the combination of short-covering and people taking the Johnson Matthey report as not perhaps being as bearish as they might have seen," Tom Kendall, precious metals strategist at Mitsubishi Corp, said. Precious metals refiner Johnson Matthey said global demand for platinum catalytic converters would climb 2 percent in 2008 on higher consumption in Europe and emerging economies, despite a sharp decline in North America. Prices were also supported by news that Lonmin, the world's third-biggest platinum producer, would close its high-cost mines and that it was cutting costs to survive a market downturn. "It is not a big headline grabbing number of ounces but people look at it and see that there will probably further action to come from South African producers in terms of moderating some of their less economic production," Kendall said. But analysts do not expect a major recovery in the platinum price as the demand from the auto sector, which has been severely affected by the global downturn, remains key. More than 60 percent of global platinum use goes to autocatalysts to clean exhaust fumes. Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo, said Johnson Matthey's price range of $700 to $1,400 an ounce for platinum was reasonable but demand remained in doubt. "There's no actual demand at this moment. Jewellery and auto companies are not buying. " Despite the gains, fears about the future of the financially ailing General Motors weighed on the market and could trigger another bout of selling, he said. "Tomorrow or the day after, the situation will gradually change," Sonoda said. Platinum roared to a record $2,290 in March as a power shortage in main producer South Africa disrupted mining. But prices have tumbled since then on deteriorating car sales, and platinum also tracked declines in gold as fears about the global economic slowdown deepened. Gold, whose movements often dictate platinum, held near New York levels. Spot gold was trading at $736.05 an ounce versus $736.35 an ounce in New York late on Tuesday. "For now gold is likely to remain in the current $720-765 range," analyst James Moore at Thebulliondesk.com said, adding bullion was looking at currency markets for direction. The dollar was slightly higher against a basket of major currencies while oil prices fell to a 22-month low. European shares fell as prospects of a deep global recession continued to rattle investors. But gold moves were rangebound. "A lot of the bad news and policy decisions have now been factored in," Kendall said, adding the market was waiting for a fresh news for direction. New York gold futures GCZ8 rose $3.6 an ounce to $736.3. Silver was at $9.45/9.53 from $9.60 and palladium at $211.50/219.50 from $213. Labels: ADVFN NewsDesk, Market Analysis, Market Trend, money trading, Moving Average, World Market |
posted by Matbank at 3:09 PM
