Thursday, December 11, 2008
Dec-11 World Daily Markets Briefing
| by: ADVFN Newsdesk US Stocks at a Glance Jobless Claims Jump To 26-Year High WASHINGTON -- The U.S. labor market weakened further last week, with the number of first-time filings for state unemployment benefits jumping by 58,000 to a 26-year high of 573,000, the Labor Department reported Thursday. The number of people collecting unemployment benefits rose by 338,000 to 4.43 million, also the highest since late 1982. The 338,000 increase in the week ending Nov. 29 was the most since 1974. The jobless claims report shows businesses are laying off workers at a rapid pace, and finding a replacement job is ever harder for those who've lost their job. Compared with the same week a year ago, new jobless claims are up about 59%, while continuing claims are up 58%. Initial claims represent job destruction, while the level of continuing claims indicates how hard or easy it is for displaced workers to find new jobs. Several technical factors could have boosted initial claims last week, a Labor Department spokesman said. The week after Thanksgiving is traditionally the one with the biggest increase in first-time claims, and the government's seasonal adjustment factors may be overstating the increase this year. Part of the increase in filings last week could simply be administrative catch up from Thanksgiving week, when most state unemployment offices were closed for two days. Technical factors aside, the report shows a marked deterioration in the labor market. The four-week moving average of new claims - which tends to smooth out the impact of any special factors - rose by 14,250 to 540,500, also the highest since late 1982. The four-week average of continuing claims rose by 131,000 to 4.13 million, the highest since early 1983. The insured unemployment rate -- the proportion of covered workers who are receiving benefits -- increased by two-tenths of a percentage point to 3.3%, the highest in 16 years. Next week's report on initial claims will cover the same week in which the monthly survey is conducted. In November, 533,000 nonfarm payroll jobs were lost, the most since 1974. The economy has shed 1.9 million jobs since the recession began in December 2007. Typically, unemployment benefits run out after 26 weeks for those who are eligible. A federal law extends unemployment benefits for an extra 13 weeks under the separate federal program. Benefits are generally available for those who lose their full-time job through no fault of their own. Those who exhaust their unemployment benefits are still counted as unemployed if they are actively looking for work. In other reports, the Labor Department said import prices fell a record 6.7% in November as imported oil prices fell a record 25.8%. The Commerce Department said the trade gap widened to $57.2 billion in October. Forex FOREX-Dollar falls broadly; euro surges LONDON - The dollar fell broadly on Thursday as doubts surfaced whether demand for the U.S. currency, which has remained high during times of financial market stress, will hold up. The U.S. currency hit a 7-week low against the yen and a 6-week low versus the euro. Against a basket of currencies, the dollar was down 1.5 percent at 84.188, its lowest since early November. "The only factor that has been supporting the dollar over the last few months has been repatriation of funds out of overseas equity markets," Nick Parsons, head of markets strategy at nabCapital. "As you start to see some stabilisation in asset markets, the only support for the dollar is being gradually eroded." World stocks as measured by MSCI's all-country index has risen 2.1 percent so far this month, while the dollar has fallen around 2.5 percent on the month to date against a basket of six major currencies. Implied interest rate spreads also moved in the euro's favour after European Central Bank Executive Board member Juergen Stark said late on Wednesday the bank did not have a lot of room for manoeuvre on rates after its cut last week. Having climbed on a wave of risk aversion in recent months in tandem with the low-yielding Japanese yen, some analysts said further dollar demand into the year-end from deleveraging flows might be showing some sign of cooling. A fall in volatility also indicated that extreme risk aversion may be easing. "We're seeing some year-end position adjustment. With volatility coming down, it may prompt some investors to dabble in risk," said Geoffrey Yu, strategist at UBS in London. By 1259 GMT, the dollar was down 1.2 percent at 91.49 yen, closing in on a 13-year low of 90.87 yen. The euro was up 1.6 percent on the day at $1.3233, having hit a six-week high of $1.3246. Implied volatility on one-month dollar/yen currency options fell below 20 percent on Thursday compared with that level seen at the start of the week. The single currency spiked late on Wednesday after the Stark comments, while implied euro/U.S. rate spreads reflected a cooling in ECB rate cut expectations. By contrast, the U.S. Federal Reserve is expected to cut rates again next week. "If the euro zone is being perceived to still have rates at substantially higher levels then obviously there's a positive rate spread, but I'm not convinced that its ultimately going to be positive as the dynamics of the euro zone economy are pretty weak," Rabobank markets strategist Jeremy Stretch said. The euro also hit a record high against sterling, rising to a high of 88.97 pence, according to Reuters data. The Swiss National Bank became the latest leading central bank to cut interest rates, but its impact was limited as the 50 basis point move paled in comparison with more dramatic reductions from other central banks last week. The dollar dipped to 1.1890 Swiss francs compared with 1.1905 francs just before the SNB rate decision, and the euro rose to 1.5736 francs from 1.5625 francs. There was little reaction in FX markets to the approval of a $14 billion auto industry bailout plan by the U.S. House of Representatives. While the House stuck to its plan, uncertainty was seen in the Senate, where a razor-thin Democratic majority cannot ensure passage. A vote could come as early as Thursday, but some Republicans have vowed to slow or even block the legislation. Elsewhere, cracks were appearing in the global effort to drag the world out of recession on Thursday with Germany attacking Britain ahead of an EU summit for rushing into debt to bail out industries and pump up growth. In an interview with Newsweek magazine, Finance Minister Peer Steinbrueck urged governments to pause before pledging to spend billions of dollars to try to push their economies out of trouble. Europe News Oils limit losses for Europe shares at midday LONDON - European shares were down at midday on Thursday, driven lower by financial shares on renewed fears of global economic weakness, and by autos stocks on uncertainties over the proposed U.S. bailout package. Falls, however, were offest by oil stocks, which tiptoed higher on stronger crude prices. At 1202 GMT, the pan-European FTSEurofirst 300 index was down 0.5 percent at 855.68 points, snapping a three-session winning run. The index has lost more than 42 percent this year, battered by the credit crisis, which has helped push several major economies into recession. Crude oil futures rose more than 5 percent to $45.74 a barrel, after the International Energy Agency predicted global demand would grow in 2009 and on expectations OPEC would cut supplies at a meeting next week. Heavyweight energy stocks were outstanding gainers. Total, BP, Royal Dutch Shell and Statoil rose between 1.4 percent and 5.3 percent. Tullow Oil surged 15.4 percent, boosted by its announcement on new oil finds in Ghana and Uganda. "I think the commodities sectors are making sense, from the point of view of valuations, with miners down to four times (earnings) and oils down to six," said Philip Isherwood, strategist at Dresdner Kleinwort. "The industry is waking up to Rio's announcement, and rediscovering self-discipline. We've moved up to 'overweight' on commodities." Isherwood said the "problem with the policy initiatives is that the response is proportionate to the economic problems. You're getting a lot because you've got a lot of problems." The U.S. House of Representatives approved a rescue plan legislation on Wednesday to help embattled U.S. automakers, but the plan has to be approved by the Senate where prospects for passage appeared grim. BMW, Peugeot and Fiat were down between 1.7 percent and 3.2 percent. Among banks, BNP Paribas, Banco Santander, HSBC and UBS were down between 0.9 percent and 1.9 percent. Fortis soared 20 percent after reports the Belgian government no longer rules out handing its 11.6 percent stake in French bank BNP Paribas to Fortis. BNP Paribas declined to comment, while no one at Fortis could immediately comment. Insurer Standard Life fell 4.9 percent. AstraZeneca fell 1 percent after dropping two experimental cancer treatment drugs. Other pharmaceutical stocks continued declines from yesterday, including GlaxoSmithKline, which fell 1.3 percent. Belgian supermarket group Delhaize was up 1 percent on news it was one of 17 companies being promoted to the FTSEurofirst 300. Others promoted include Ryanair, up 0.3 percent. All three Irish banks in the index -- Allied Irish Banks, Anglo Irish and Bank of Ireland will be ejected. The index changes will take effect from Dec. 22. However, the Irish banks were mixed, with Anglo Irish Banks up 16.7 percent. Negative corporate news weighed on the market, especially on retailers. Finland's top magazine paper maker UPM-Kymmene Oyj said its fourth-quarter operating profit is expected to be less than the same quarter a year ago after sales slowed more than expected. Shares in UPM were down 9.9 percent. Within the sector, Stora Enso shed 7.6 percent Shares in Zara fashion store owner Inditex rose 4.9 percent despite the company's nine-month net profit missing estimates. Across Europe, the FTSE 100 index was up 0.5 percent, the German DAX index was down 0.3 percent and France's CAC index was down 0.2 percent. Asian Market Nikkei edges up on hope for economy, but yen weighs TOKYO - Japan's Nikkei average rose 0.7 percent on Thursday as hopes that global stimulus measures will prop up the economy won out over a stronger yen and worry whether a U.S. auto bailout will be passed by the Senate. Honda Motor Corp soared after the U.S. House of Representatives approved bailout legislation that would shore up Detroit's Big Three for now, but Canon Inc and other exporters slipped as the yen edged up against the dollar. Sumitomo Mitsui Financial Group, Japan's third-largest bank, extended gains after saying it would raise $5.8 billion in capital by issuing preferred securities. "The market has risen on hope -- hope of infrastructure projects as part of economic packages in the United States and China, and reassurance that the auto bailout has passed the House," said Hideyuki Ishiguro, a supervisor at the investment strategy department of Okasan Securities. "But it also seems that markets have risen too far, given the economic fundamentals, with further rises on expectation alone very hard. And the autos bill has yet to pass the Senate." The U.S. House of Representatives approved bailout legislation that would force automakers to restructure or fail, sending the measure to the Senate, where prospects for passage appeared grim. Still, some in the market said expectations were growing that the Nikkei may have bottomed out, noting that recent gains in other Asian markets as well suggested that foreign investors may be buying into Asia. "I think it's probably safe to say that the Nikkei's hit bottom," said Masayoshi Okamoto, noting that the Nikkei has managed to reach and break over 8,500, previously a key psychological level. The benchmark Nikkei gained 60.31 points to 8,720.55 after going in and out of negative territory all day, extending its winning streak to four days with a gain of 10 percent. The broader Topix rose 1.8 percent to 849.25. The yen advanced slowly throughout the day. By the close the dollar was fetching 92.29 yen, pressuring exporters, whose overseas profits fall when repatriated. Canon lost 0.7 percent to 2,750 yen and Hitachi Ltd fell 2.4 percent to 414 yen. But autos held on to gains, with Honda up 7.9 percent at 2,195 yen, becoming the biggest contributor to the Nikkei by volume weight. Toyota Motor Co rose 4.8 percent to 3,070 yen. Hope that economic stimulus packages mean infrastructure work helped power shippers higher after a key freight index rose for the second straight day. Mitsui O.S.K. Lines powered up by 7.8 percent to 593 yen and Kawasaki Kisen rose 8.4 percent to 427 yen. Nippon Yusen gained 8.7 percent to 574 yen. Sumitomo Mitsui Financial Group surged 9.6 percent to 342,000 yen, and other banks also gained, partly on a sense the sector had been slower to recover than others, market players said. Top bank Mitsubishi UFJ Financial Group rose 6.8 percent to 500 yen and second-ranked Mizuho Financial Group rose 4.1 percent to 235,000 yen. But these rises were countered by profit-taking that hit a wide range of domestic demand shares. KDDI Corp fell 4.5 percent to 598,000 yen and Fast Retailing lost 2.6 percent to 12,930 yen. Cosmetics and personal care product maker Kao Corp slid 1.9 percent to 2,660 yen. Trade was active on the Tokyo exchange's first section, with 2.25 billion shares changing hands, compared with last week's daily average of 1.81 billion. Advancing stocks beat declining ones by nearly 3 to 1. Labels: Market Analysis, Market Trend, money trading, World Market |
posted by Matbank at 3:25 PM
