Tuesday, December 9, 2008
Dec-8 MOHD AZMI - World Daily Markets Briefing
| by: ADVFN Newsdesk Forex FOREX-Dlr, yen stung, bailout hopes cool risk aversion LONDON - The dollar fell sharply against the euro and a basket of currencies on Monday as talk of an imminent bailout deal for stricken U.S. automakers boosted equities and helped to quell extreme levels of risk aversion. European shares rose 5 percent while the low-yielding Japanese and U.S. currencies fell against the Australian dollar, sterling and other currencies perceived in the market to be high-risk due to their higher yields. Analysts said expectations that a rescue of the "Big Three" U.S. automakers will materialise, along with more stimulus measures from governments around the world was helping to calm a recent sell-off in risky assets. Some added that this was cooling risk aversion even after figures late last week painted a grim picture of U.S. employment, with non-farm payrolls declining by 533,000 in November, the biggest drop in over three decades. "The economy continues to deteriorate beyond expectations but that is now met on the other side with a more pro-active policy stance," said Michael Hart, currency strategist at Citigroup in London. "These two elements are pulling in two directions and that's why we're seeing such volatility," he said, adding that impact fiscal stimulus plans were helping to push the dollar lower. By 1138 GMT, the euro traded 1.1 percent higher at $1.2868, after jumping as high as $1.2915, its highest level since late November. The dollar index fell as low as 85.725, its weakest in more than a week. The single currency rose 1.6 percent to 120.20 yen, having climbed as high as 120.98 yen as the euro was boosted by higher regional shares. Stock market gains are seen as a sign of easing risk aversion and can curb demand for the yen, which tends to grow when risk-taking declines and carry trades are unwound. "Higher stocks are driving everything at the moment and currencies are trading in line with this, with higher yielders gaining and lower yielders on the defensive," said Adam Cole, global head of FX Strategy at RBC Capital Markets. The equities rally also benefited the pound, which gained 1.0 percent against the dollar to $1.4915, while the higher-yielding Australian dollar jumped more than 3 percent to $0.6691. The Australian dollar, whose 4.25 percent yield for the moment continues to dwarf the yen's 0.3 percent while the Reserve Bank continues to slash interest rates, rose nearly 3 percent to 61.88 yen. Against the yen, the dollar traded 0.4 percent higher at 93.20 yen, but pulled away from a session high of 93.91 yen hit on electronic trading platform EBS. White House and Congressional negotiators sought on Sunday to settle remaining differences over an emergency rescue for the struggling auto industry. Hopes for a bailout gained traction after Friday's disappointing employment figures encouraged U.S. lawmakers to take action to shield the economy from the credit crunch and a global recession. U.S. president-elect Barack Obama also said on Saturday that his plan to create at least 2.5 million new jobs included the largest infrastructure investment since the 1950s and a huge effort to reduce U.S. government energy use. Despite the dollar's slide on Monday, analysts do not expect the U.S. currency to continue losing ground, as major concerns remain about the possibility of a deep global recession, which many say will keep investors extremely wary of taking on risky positions. "We remain wary about the impact of escalating bad news on the economic front, which we believe will keep risk aversion elevated for some months to come," analysts at Calyon said in a research note. US Stocks at a Glance US STOCKS-Wall St surges at open on stimulus bets NEW YORK - U.S. stocks opened sharply higher on Monday on hopes that President-elect Barack Obama's plan for major infrastructure investment would help avert a deeper slump in the economy. Benchmark indexes up more than 2 percent. Optimism that automakers would receive a lifeline from the U.S. government added to the positive tone. The Dow Jones industrial average was up 224.68 points, or 2.60 percent, at 8,860.10. The Standard & Poor's 500 Index was up 24.85 points, or 2.84 percent, at 900.92. The Nasdaq Composite Index was up 33.46 points, or 2.22 percent, at 1,542.77. Some U.S. stocks watch on Dec 8: MCDONALD'S CORP Fast-food restaurant McDonald's reported global comparable sales increased 7.7% in November. Systemwide sales for McDonald's worldwide restaurants were up 1.9% for the month, or 9.6% in constant currencies. Shares rose 1.8 percent to $63.85 in premarket activity. 3M CO Diversified technology company 3M reduced its fiscal year 2008 earnings guidance from $5.40 to $5.48 per shares from its prior view of $5.10 to $5.15. The current Wall St estimate is $5.43 per share. The company also expects full-year 2009 volumes to decline in the range of 3 to 7 percent and a negative foreign currency impact of 6 to 7 percent on sales. For 2009, the company expects earnings between $4.50 to $4.95, below the current Wall St estimate of $5.31 per share. Shares fell 1.8 percent to $58.80 in premarket activity. BRISTOL-MYERS SQUIBB ASTRAZENECA Bristol-Myers and AstraZeneca announced the expansion of their collaboration to include the development and commercialization of their type 2 diabetes treatment, dapagliflozin, in Japan. Dapagliflozin, one of two investigational drugs under joint development by the companies, is currently being studied in Phase III clinical trials in several countries, including the US. GENERAL MOTORS FORD MOTOR The U.S. Senate was scheduled to reconvene on Monday to draft legislation to bail out the U.S. auto industry in a move to try and contain a deepening recession. Shares of General Motors, a Dow component, closed Friday at $4.08 and rose to $5.09 before the bell on Monday. Ford Motor closed Friday at $2.72 and edged up to $3.28 in premark et trade. NBTY INC Nutritional supplement manufacturer NBTY Inc reported preliminary net sales of $199 million for November, a 26 percent increase from its year-ago results. HUMAN GENOME SCIENCES NOVARTIS Biopharmaceutical company Human Genome Sciences said that its Albuferon drug met its primary endpoint in a Phase 3 trial in combination with with ribavirin in treatment-naive patients with genotypes 2 and 3 chronic hepatitis C. METLIFE INC Insurance provider MetLife said that premiums, fees and other revenues for the fourth quarter of 2008 are expected to be between $7.9 billion and $8.5 billion, compared with $7.7 billion for the fourth quarter of 2007. For the full year 2008, premiums, fees and other revenues are expected to be between $3 2.7 billion and $33.3 billion compared with $29.8 billion for 2007. Shares rose 4 percent to $32 in premarket activity. European Shares Europe shares jump on stimulus plans; oils lead LONDON - European shares raced higher on Monday, boosted by energy, financials and automobile stocks, on optimism that government stimulus packages would soften a global economic downturn and improve demand for basic commodities. At 1154 GMT, the FTSEurofirst 300 index of top European shares traded 5.4 percent higher at 837.05 points. The benchmark has fallen 44 percent so far this year, hammered by a credit crisis that piled up losses at banks and tipped major economies into recession. Energy shares led the rally, helped by a 6 percent jump in crude prices, while banks, pharmaceuticals, automobile and mining shares also advanced. Gas producer BG Group, Tullow Oil, BP and Royal Dutch Shell added between 5 and 8.6 percent. Barclays jumped 8.5 percent, Lloyds TSB was up 7 percent, Royal Bank of Scotland added 6 percent and UBS rose more than 5 percent. U.S. President-elect Barack Obama unveiled plans over the weekend for the largest U.S. infrastructure investment programme since the 1950s and to create 2.5 million jobs, which analysts said could cost at least $500 billion. "After the confirmation of Obama's spending plans, a breath of fresh air has blown through the markets," said Andrew Turnbull, senior sales manager at ODL Securities. "Our stance is that this is a positive move by the U.S. president elect and the markets will welcome plenty more of this," he added. Chinese and European leaders were due to plot their next steps on Monday to move the world economy back from a precipice, India planned $4 billion of extra spending and Australia began handing out cash to families and pensioners, part of a stimulus package unveiled in October. Automobile shares rose on hopes stimulus plans would revive vehicle demand. The U.S. Senate is due to reconvene on Monday as White House and Democratic congressional negotiators sought to draft legislation to bail out the auto sector. Daimler surged 8 percent, Volkswagen rose 4.7 percent, Porsche gained 4.4 percent and Fiat was up 5 percent. Across Europe, Britain's FTSE rose 4.8 percent, France's CAC gained 6.7 percent and Germany's DAX rose 6.3 percent. Analysts said stimulus packages would improve sentiment, but the banking system was yet to function smoothly despite trillions of dollars of bailout plans across the globe. A lack of bank-to-bank lending remains at the root of the world economy's problems. Banks deposited 250 billion euros at the European Central Bank overnight, a sign that they are still hoarding money as fears of further bank collapses persist. "The central banks have done their job and now the focus is on governments -- in addition to Obama's plan we have stimulus packages from India, Australia and China," said Thierry Lacraz, strategist at Pictet in Geneva. "While this will not avoid a recession, investors at least have the feeling that the people in charge are doing the right thing," he said. German exchange operator Deutsche Boerse rose 7.8 percent after it said over the weekend that it was in regular talks with other exchanges such as NYSE Euronext. It said any merger talks with NYSE Euronext had ended without success. Carphone Warehouse fell 3.5 percent after David Ross, the co-founder of British mobile phone retailer, resigned as deputy chairman after failing to declare he had pledged shares he owned in the company against personal loans. There were concerns Ross might have to sell his 19 percent stake. Italian oil group Eni jumped more than 9 percent after Libya's ambassador to Italy said his country would be interested in buying up to 10 percent of Eni, one of a number of investments it is considering in Italy. Asia at a Glance Markets Upbeat On Hope For More Government Stimulus Plans Asian stocks soared Monday, with Hong Kong's benchmark stock index up more than 8% and Japan's top index up more than 5%, as investors rallied around signs that governments will roll out more stimulus measures in coming weeks to ward off economic disaster. Drugmakers were among the standouts in Tokyo while energy group Santos Ltd. led gains in the commodity sector in Sydney on reports it may be the target of a takeover attempt. Property stocks were among standouts in Hong Kong, with the Hang Seng Index closing up 8.7% at 15,044, the highest level in almost two months. Shares of mainland-geared China Overseas Land & Investment rose 14.8%. Shares of Santos jumped 9% following a Monday report in the South China Morning Post saying that China National Petroleum Corp. is considering pairing with a foreign oil sector in making a bid for the Australian oil and gas producer. The report did not identify sources. National Australia Bank led the financial sector higher in Sydney, its shares rising 5.8%. Indian stocks advanced, led by banks and car makers, after the government announced during the weekend plans for an extra 200 billion rupees ($4.1 billion) in stimulus spending for the fiscal year ending in March. The Reserve Bank of India also cut interest rates by 1 percentage point to 6.5%, the third rate cut since October. Technology stocks were among the top performers in South Korea, where the Kospi Composite index rose 7.5%, led higher by Samsung Electronics Co., which rose 8.7%. The U.S. dollar was traded at 93.27 yen late in Tokyo, down from its Friday close of 93.34 yen in New York. In other regional action, Japan's Nikkei 225 rallied 5.2% to close at 8,329.05. Japan's current-account surplus contracted 56.5% to 960.5 billion yen ($10.35 billion) in October from the year-earlier month. That's the eighth straight monthly decline, as both exports and imports softened, according to data released Monday by the Ministry of Finance. Other big advancers in Hong Kong included financials such as Ping An Insurance, shares of which added 12%. Hong Kong Exchanges & Clearing , operator of the local stock and futures markets, saw its shares leap 16.3% after a Hong Kong government official said a long-delayed program to enable Chinese residents to invest in Hong Kong-listed, known as "through train", remains alive, although no details were given the reform would be approved anytime soon. Tokyo gainers included pharmaceutical groups Eisai Co. and Chugai Pharmaceutical Co. , whose shares rose 8.2% and 5.2%. Other Sydney-listed resource companies trading higher included Woodside Petroleum and BHP Billiton (BHP), whose shares were up 8.5% and 4.1%. Ivanhoe Australia's shares jumped 23% after the miner reported exploration work had indicated promising molybdenum and rhenium deposits at a mine in Queensland state. Shares of Honda Motor Co. (HMC) ended 5% higher. The Japanese auto maker said Friday it would withdraw from the Formula One race series immediately in a bid to save cash and realign its engineering and development resources in the deteriorating global sales outlook. Speculation in Japan had focused on whether Honda's move might prompt the larger Toyota Motor Co. (TM) to also pull out from racing. Toyota's shares added 3%. Isuzu Motors' shares climbed 9.3%, helped by expectations the truck maker's joint-venture partner, General Motors (GM), will receive emergency financial backing as part of the bailout for Detroit automakers under consideration in Washington. Lawmakers are expected to vote on the rescue package later this week. January light sweet crude oil futures were up as much as $2.45 to $43.26 a barrel in electronic trading in Tokyo. Crude-oil prices ended at a four-year low of $40.81 a barrel in New York Friday. Other stocks on the rise Monday included Sinopec (SNP), shares of which jumped 9.6%, as investors judged reforms in China's domestic fuel pricing system as benefiting the firm's profit margins. Metals Gold rallies as investors fret about inflation LONDON - Gold surged on Monday, helped by higher oil prices, a lower dollar and investor concern about inflationary pressures given the large amounts of money being pumped into the global economy. Autocatalyst material platinum jumped more than 6 percent to $840 an ounce, while palladium gained more than 11 percent to $178 on growing optimism about a rescue for the auto industry in the United States. Spot gold rose nearly 3 percent to $776.70 an ounce and was up at $773.90/775.90 at 1030 GMT from $754.60 in New York late on Friday, when it fell to $740.40, the lowest since November 20 in a commodities-wide sell-off. To some, talk of inflation is premature given the world is currently grappling with the prospect of deflation, but forward - looking investors are adding to their holdings of the precious metal to preserve the value of their portfolios. "We will see some deflation, but that will be shortlived and the inflationary impact of substantial fiscal stimulus ... will inevitably lead to inflation," said John Meyer, analyst at investment bank Fairfax. "Gold will be an important commodity in the protection of value," he said. Fairfax expects gold to average $900 an ounce next year compared with a previous forecast at $550. Central banks have pumped cash into the world's financial system and slashed interest rates in an attempt to ease the credit crunch and boost confidence. Chinese and European leaders are due to plot their next steps on Monday to move the world economy back from a precipice, while stimulus measures presented, planned or pending injected optimism into stock markets. Adding to investor worries about inflation was oil, which leapt 6 percent to above $43 a barrel. Gold often rises in line with oil, which can trigger inflation, while a weaker U.S. currency makes metals priced in dollars cheaper for holders of other currencies. "The dollar and oil are doing their bit for gold, but we are seeing a lot of investor interest in gold," a trader said. The U.S. Senate will reconvene later on Monday as negotiators seek to draft legislation to provide the three largest automakers with $15 billion in short-term loans. Expectations that the plan could be agreed were bolstered after U.S. President-elect Barack Obama said the auto industry could not be allowed to collapse. The news boosted platinum and palladium, used to make autocatalysts that cut carbon emissions. Palladium was at $178/185 an ounce from $159.50 on Friday and platinum at $839/859 from $788. "Having sustained substantial price corrections between July-October, platinum is currently benefiting from a good degree of bargain hunting buying, mainly from those with longer-term outlooks," TheBullionDesk.com said in a note. "However, with more negative auto data expected and commodities generally under pressure the short-term view is still a little negative." Spot silver rose nearly 5 percent to $9.91 and was at $9.84/9.82 from $9.45 on Friday. Labels: Forex Analysis, Forex Trend, Market Analysis, Market Trend, money trading, Moving Average, World Market |
posted by Matbank at 11:51 PM
