Friday, December 5, 2008
Dec-04 World Daily Markets Briefing
| by: ADVFN Newsdesk US Stocks at a Glance US STOCKS SNAPSHOT-Market falls at open on outlooks, sales NEW YORK - U.S. stocks opened lower on Thursday as disappointing outlooks from blue-chip companies, including drugmaker Merck and chemical maker DuPont , suggested the economic slump is worsening. Bleak November retail sales from major retailers, including Target Corp, heightened worries about consumer spending. Job cut announcements from phone company AT&T and media company Viacom, spotlight severity of recession The Dow Jones industrial average was down 74.95 points, or 0.87 percent, at 8,516.74. The Standard & Poor's 500 Index was down 10.17 points, or 1.17 percent, at 860.57. The Nasdaq Composite Index was down 20.32 points, or 1.36 percent, at 1,472.06. TABLE-U.S. jobless claims fell in latest week U.S. Labor Department report of initial state jobless benefit claims, seasonally adjusted. Week Ended Initial Claims 4-Week Avg. Continued Claims 11/29/08 509,000 524,500 Unavailable 11/22/08 530,000-R 518,250-R 4,087,000 11/15/08 543,000 507,000 3,998,000-R 11/08/08 516,000 491,000 4,016,000 11/01/08 484,000 477,750 3,906,000 10/25/08 485,000 477,000 3,832,000 10/18/08 479,000 480,500 3,721,000 10/11/08 463,000 484,750 3,727,000 R-revised REVISIONS: Initial claims: Nov. 22 from 529,000 4-Wk Average: Nov. 22 from 518,000 Continued Claims: Nov. 15 from 3,962,000 STATES WITH INCREASES IN CLAIMS OF MORE THAN 1,000: The department said 26 states reported an increase in claims, not seasonally adjusted, of more than 1,000 in the week ended Nov. 22, the latest period for which data is available. Among the largest were: California 10,882 Ohio 6,658 Michigan 6,611 Indiana 6,501 Missouri 5,820 Kentucky 4,992 Texas 4,702 Pennsylvania 4,584 STATES WITH DECREASES IN CLAIMS OF MORE THAN 1,000: The department said no states reported a decrease in claims, not seasonally adjusted, of more than 1,000 in the week ended Nov. 22, the latest period for which data are available. FORECASTS: Reuters survey of U.S. economists' forecast: U.S. Jobless Claims: 537,000 U.S. Continued Claims: 4.02 mln NOTES: The insured unemployment rate, a measure of the work force receiving unemployment benefits, was 3.1 percent in the week ended Nov. 22, up from 3.0 percent the prior week. That was the highest since 3.1 percent in the week ended Sept. 26, 1992. Forex MONEY MARKETS-Year-end strains keep dlr spread wide LONDON - The rates banks charge each other for borrowing dollar, euro and sterling funds edged lower on Thursday as major central banks around the world slashed interest rates aggressively. But persistent anxiety over banks' year-end funding needs has kept the spread of three-month London interbank offered rates (Libor) over anticipated central bank rates, or Overnight Index Swap (OIS) rates, at elevated levels. The spread is seen as a gauge of banks' willingness to lend to each other -- a wider spread indicates decreased inclination to lend. On Thursday, the three-month dollar Libor rate was fixed at 2.19 percent compared with 2.20 percent on Wednesday, well off the peak of around 4.82 percent set in October in the wake of the colla pse of Lehman Brothers in September. While Libor rates have generally been trending lower in the last few weeks or holding within recent ranges, spreads over OIS have tended to widen. The three-month dollar/OIS spread expanded 6 basis points to 189 basis points. See for latest Libor fixings by the British Bankers Association. "There are still some fears about year-end liquidity pressures and that has certainly acted as a constraint in improvement in Libor markets," said Nick Stamenkovic, bond strategist at RIA Capital Markets in Edinburgh. Libor rates are only indicative prices of where banks are lending to each other, which institutions use as a base to set their own lending rates. The European Central Bank, Bank of England, Sweden's Riksbank and Bank of New Zealand all chopped borrowing costs by between 75 and 175 basis points to help kick-start the global economy away from a prolonged downturn. "We're still a long way from normalisation and a long way from levels where banks will be prepared to lend again," Stamenkovic added. Indeed, banks continued to prefer hoarding the cash piles given to them by central banks rather than lend. Latest data showed European banks deposited 231.6 billion euros at the ECB overnight as of Dec. 3, up from 217.4 billion euros reported on Wednesday, but still below the record 297.4 billion euros seen early last month. Banks also borrowed more from the ECB's emergency overnight loan facility, up to 1.953 billion euros from 1.165 billion euros borrowed previously. The picture is similar in Asia, where growing anxiety over banks funding their year-end needs and mounting expectations for further monetary easing were reflected in wide dollar interbank spreads and volatile Korean swap markets. "There is enough doubt about banks and there's obviously a lot of stress in the system," said ING's Asian chief economist Tim Condon in Singapore. Earlier this week, a panel of economists formally declared the U.S. economy in recession since December 2007, while markets are also dealing with slumping prices and the threat of deflation in Japan and elsewhere. European News Europe shares up by midday after BOE cut; ECB eyed LONDON - European shares were up by midday on Thursday, having pared gains after the Bank of England (BOE) slashed interest rates by 1 percentage point, and as investors awaited the European Central Bank's (ECB) rates decision. By 1215 GMT, the FTSEurofirst 300 index of top European shares was up 0.6 percent to 834.95 points. The FTSEurofirst 300 index is down 44.2 percent for the year. The BOE cut interest rates to 2 percent taking borrowing costs to their lowest in more than half a century, amid signs the economy is heading for a deep recession. "Interest rates are ... highlighting the very serious situation that the UK economy is in," said Howard Archer, chief UK economist at IHS Global Insight. At 1245 GMT, the ECB is expected to cut interest rates sharply with financial markets fully pricing in a 75 basis point cut from the current 3.25 percent as the euro zone economy slowed. The European Union's statistics office, Eurostat, confirmed its earlier estimate that the economy of the 15 countries using the euro shrank 0.2 percent quarter-on-quarter in July-September after a 0.2 percent fall in the previous three months. Bank of America's Holger Schmieding said: "There is no surprise. Consumption is flat, investment down, government expenditure up and exports not much of a help. "Of course, it's just a prelude to a serious recession as two of the months, July and August, were before the real crisis erupted. We expect a 75 basis point cut from the ECB today." Financials gained the most points on the index Credit Suisse surged 5.2 percent after its chief executive said it does not foresee any circumstances in which it would need any state help. The group also announced it was cutting another 5,300 jobs, as it revealed it made a net loss of about 3 billion Swiss francs in October and November. UBS, Credit Agricole, Nordea Bank and BNP Paribas were up between 2.1 percent and 6.7 percent. "This is not that much of a surprise as we have seen a similar good performance of banks in the U.S. overnight. The U.S. Treasury Department is trying to find ways to reduce new mortgage rates limited to a level of 4.5 percent," said Heino Ruland, strategist at FrankfurtFinanz. Energy stocks also contributed to large gains on the index. BG Group was up 4.8 percent after BP said it has agreed to an asset swap with the UK gas producer. BP was 0.2 percent higher. Across Europe, the FTSE 100 index was up 0.4 percent, Germany's DAX was 1.7 percent higher and France's CAC 40 was up 0.9 percent. Siemens rose 1.7 percent after the group said it was looking to increase sourcing and exports from Asia to help control costs. On the downside, French power group EDF fell 3.8 percent after it said the building costs for its EPR new generation nuclear reactor in Flamanville would be 20 percent higher than previously estimated, but that it remained on track for a 2012 start. Asia at a Glance HK shares erase early gains as local developers weigh HONG KONG - Hong Kong shares fell 0.6 percent on Thursday, wiping out a 2 pecent gain earlier in the day, as investors dumped local developers after lenders such as HSBC raised their Hong Kong mortgage rates. But Chinese financial stocks held on to their gains in response to Beijing's planned measures to further boost liquidity. The benchmark Hang Seng Index closed the session 78.88 points lower at 13,509.78, led by a 2.2 percent drop in HSBC. Sentiment turned grim in the afternoon session after Swiss lender Credit Suisse said it had a net loss of $2.5 billion at the end of November and it was shedding 5,300 jobs. "The report that Credit Suisse will cut its work force dominated the market after lunch," said Benjamin Collett, head of hedge fund sales trading at Daiwa Securities SMBC Co. "This is yet another downside of the financial distress." Billionaire Li Ka-shing's flagship property firm Cheung Kong (Holdings) fell 3.4 percent, while rivals Henderson Land shed 2.5 percent and Sun Hung Kai Properties lost 1.2 percent. Bank of China (Hong Kong) and HSBC this week raised their mortgage rates by between 50 and 75 basis points. China's top lender, ICBC, gained 1.8 percent, while smaller rival China Construction Bank (0939.HK: Quote, Profile, Research) rose 2.1 percent, on hopes China will further cut the reserve requirement on deposits to spur lending. "There is an economic conference by top leaders in China right now and the market is expecting more stimulus. That's supporting investor sentiment," said Y.K. Lee, analyst at Core-Pacific Yamaichi. China's cabinet on Wednesday approved measures aimed at keeping the stock market steady, boosting bond issuance and increasing the supply of credit. The nation's No.1 insurer, China Life Insurance, rose 1.2 percent, while smaller rivals Ping An Insurance soared 5.4 percent and PICC P&C surged 10.2 percent. A total of $39.9 billion ($5.1 billion) worth of shares changed hands, up from HK$38.0 billion on Wednesday. The Chinese Index of top locally listed mainland Chinese firms was little changed 7,227.19. Chinese telecom shares jumped on renewed speculation that 3G licences will be issued by the end of the year. The nation's biggest cellular phone network, China Mobile, rose 1.6 percent, while smaller rival China Unicom 0762 gained 1.6 percent. Fixed-line operator China Telecom was up 4.1 percent. i-Cable Communications slumped 7.7 percent. The company said on Wednesday its controlling shareholder had decided not to proceed with a possible privatisation proposal. City Telecom jumped 16 percent after the Hong Kong telecom service provider said earlier on Thursday its chairman Ricky Wong will assume CEO office of ATV with immediate effect. Labels: Forex Analysis, Forex Trend, Market Analysis, Market Trend, World Market |
posted by Matbank at 1:19 PM
