Monday, January 5, 2009
Jan-05 World Daily Markets Briefing
| by: ADVFN Newsdesk US Stocks at a Glance US STOCKS SNAPSHOT-Wall St falls after sharp gains last week NEW YORK - U.S. stocks fell in opening trading on Monday as investors took profits on strong gains racked up last week, offsetting bets that U.S. President-elect Barack Obama's plan for tax cuts will help revive the economy. Obama, seeking to drum up support from both political parties, plans to propose up to $310 billion in tax cuts as part of an economic stimulus package, senior Democratic aides said on Sunday. For details see. Apple Inc chief executive Steve Jobs wrote a letter aimed at dispelling investor concerns about his weight loss this year, pushing up shares of the iPod maker. The Dow Jones industrial average fell 61.96 points, or 0.69 percent, at 8,972.73. The Standard & Poor's 500 Index lost 6.34 points, or 0.68 percent, at 925.46. The Nasdaq Composite Index shed 10.65 points, or 0.65 percent, at 1,621.56. Forex FOREX-Euro loses traction; inflation outlook weighs The euro hit three-week lows against the dollar on Monday, with weaker than expected Italian and Spanish inflation data and tax cuts in Germany seen heaping pressure on the European Central Bank to cut interest rates further soon. Sharp losses for the euro, which has shed more than 3 cents in the European session so far, also spread to the euro/sterling pair -- taking it well away from record lows for the pound reached last week and easing momentum towards parity. A slightly less hesitant attitude to risk helped lift stock market sentiment and the dollar to its highest in more than three weeks against the yen. Figures on Monday showed Italian EU-harmonised consumer prices fell 0.2 percent month-on-month in December, slowing to growth of 2.3 percent year-on-year from 2.7 percent in November. Spain's EU-harmonised inflation tumbled to a 10-year low of 1.5 percent in December, adding evidence that price pressure in the euro zone may be easing. "We've seen inflation falling in Italy and Spain and that just confirms what we would expect to see in the euro zone flash numbers tomorrow which will be sub-2 percent," said Jeremy Stretch, markets strategist at Rabobank in London. "The inflation picture is changing and that will have important implications for potential estimations of what the ECB might do," he added. By 1224 GMT, the euro had fallen 2.1 percent on the day to $1.3603, having earlier hit $1.3594 -- its lowest since mid-December, according to Reuters data. The euro also fell heavily to 93.63 pence against the pound -- pulling the battered UK currency back from recent record lows near the brink of parity. Economists polled by Reuters expect euro zone inflation figures, due on Tuesday, to show that prices rose 1.8 percent in December year on year compared with a rise of 2.1 percent previously ECON. Meanwhile German Chancellor Angela Merkel bowed to pressure to include tax relief in a new stimulus package designed to shield the economy from its worst recession since World War Two. BIG ECB RATE DECISION The European Central Bank meets next week to decide on interest rates in the single currency bloc, amid a fast changing inflation backdrop, with markets largely pricing in a chance of rates being cut 50 basis points to 2 percent. Markets also see the probability of borrowing costs falling more sharply to 1.75 percent ECBWATCH. "It will be important to closely monitor what (ECB President Jean-Claude) Trichet has to say in the next few days. The fundamental case for easing policy by at least another 50 basis points in January is strong," Brown Brothers Harriman & Co said in a note to clients. Adding fuel to euro area rate expectations, ECB Vice President Lucas Papademos said on Sunday that more interest rate cuts may be needed to shield the euro zone economy from recession . The dollar gained traction against the yen as a 1.5 percent rise in European shares hit the Japanese currency, which has benefited from falling stock prices in past months, and helped to push the dollar to its strongest against a basket of currencies and the euro since mid-December. The dollar climbed 1.2 percent to 93.39 yen according to Reuters data, its highest since early December. The dollar index, measuring it against a basket of six major currencies, rose to 83.011, its strongest since Dec. 15. Europe News Energy stocks lead European shares higher LONDON - European shares were higher at midday on Monday, continuing their New Year rally and briefly touching their highest level since mid-November, with energy stocks leading the risers. By 1130 GMT, the pan-European FTSEurofirst 300 index of top European shares was up 1.4 percent at 868.86 points after earlier hitting a session high of 871.64 points. Darren Winder, strategist at Cazenove, said: "It is a very different start from January last year, we are clearly coming off one of the worst years in history so we would expect to see a positive start. Investors are trying to be more positive because of the severity of 2008." "Even though GDP in major countries are expected to go down and unemployment is on the rise, we are now looking at much lower levels of inflation. There has been fiscal stimulus and there is now every reason to be looking at a recovery path in equities," added Winder. U.S. President-elect Barack Obama is seeking as much as $310 billion in tax cuts as part of a massive stimulus plan to counter what senior policymakers warned could be a prolonged period of economic stagnation and deflation. Officials from the Federal Reserve and the European Central Bank on Sunday vowed to fight the damaging effects of deflation as the global economy suffers a deep and lengthy recession. Jim Wood-Smith, head of research at Williams de Broe, said: "Plans from Obama and other policy makers are just confirmation of what the markets already know. Markets are higher as the equity valuations we are seeing are very low levels and they have now priced in ghastly economic data." Energy stocks were one of the top performing sectors on the index. Oil prices rose nearly 3 percent after an Iranian military commander reportedly called for an oil boycott over Israel's offensive in the Gaza Strip, and on worries over the deepening Russian gas supply row. BG Group, BP, Royal Dutch Shell and Total were up between 0.6 percent and 4 percent. Miners were mixed. Although most of the stocks were in the red, Rio Tinto and Xstrata were stand out risers, up 2.7 per cent and 2.9 percent respectively. Electricity stocks were also gainers on the index. British Energy, EDF and EDP were between 0.3 percent and 2.2 percent higher. Gas, water and multi-utilities stocks also performed well. RWE rose 2.1 percent after HSBC upgraded the group to "neutral" from "underweight". Across Europe, the FTSE 100 index was up 0.1 percent, Germany's DAX was 0.2 percent higher and France's CAC 40 was down 0.03 percent. Biggest loser on the index was the automobiles sector, after broker downgrades hit certain stocks. Renault fell back 5.1 percent after Citigroup downgraded the group to "sell" from "hold"; BMW lost 1.3 perce nt as Exane BNP Paribas cut the group to "underperform" from "outperform"; while Porsche was down 4.1 percent as Societe Generale downgraded the group to "hold" from "buy". Back to individual gainers, German chipmaker Infineon Technologies gained nearly 12 percent after the group asked shareholders for permission to raise up to 450 million euros ($626.6 million) of fresh capital to bolster its liquidity. Vodafone rose 3.8 percent, extending its recent strong run, after Credit Suisse upgraded the mobile phone group to a "trading buy" on New Year's Eve. Asia Markets HK shares rise to 4-wk high, Foxconn soars Hong Kong shares rose 3.5 percent to a four-week high on Monday on hopes that massive government stimulus spending will reinvigorate China's cooling economy, while 2008's worst performing blue chip Foxconn International boosted its value by a quarter. Foxconn, the world's largest contract manufacturer of cellphones, vaulted 25.4 percent to a three-month high of HK$3.80 on hopes the Taiwanese handset manufacturer will benefit from the imminent rollout of 3G services in China. The Hang Seng Index ended 520.50 points higher at 15,563.31. "Fund managers are buying up all of last year's worst performers on hopes that China will announce another slew of stimulus measures, this time to boost private consumption," said Philip Chan, head of research with CAF Securities. But some markets watchers expect a pullback as the main index inches towards 15,800 points, with weak economic data in the coming weeks seen limiting gains. "The U.S. markets are leading Asian markets to a short-term recovery but it's not time to get bullish yet. This rebound is only a short-term phenomenon," said Castor Pang, strategist with Sun Hung Kai Financial. The China Enterprises Index of top locally listed mainland Chinese firms rose 4.4 percent, tracking a 3.3 percent rally on the Shanghai bourse on its first trading day of the year. Aluminum Corp of China jumped 9.5 percent on hopes that it would benefit from the Chinese government's infrastructure building plans. Energy stocks rose sharply for a second day in a row as oil prices continued to edge up after an Iranian military commander called for an oil boycott on Israel amid heightened violence in the Middle East, while a Russian supply row added to geopolitical tensions. Oil stayed close to $47 a barrel in Asian trade on Monday. Offshore oil producer CNOOC rose 7.9 percent while Asia's largest oil and gas producer, PetroChina, rallied 6.9 percent. Bourse operator Hong Kong Exchanges & Clearing jumped 8 percent on hopes of recovering volumes and turnover on the mainboard as investors returned to the market after a long Christmas and New Year holiday. Turnover slumped to two-year lows in the last few days of December as long stretches of holidays kept investors on the sidelines but recovered to HK$49.4 billion ($6.3 billion) on Monday as compared with HK$30.5 billion on Friday. Fixed-line operator PCCW fell 4.6 percent after Citigroup cut its rating on the stock to hold from sell following a sharp run-up in the stock since October on buyout hopes. A rejection of a revised privatisation offer, which was recently raised to HK$4.50 per share from HK$4.20, is expected to signal a 15 percent correction in the stock price, said Citi in a report on Monday. The stock soared 7.2 percent to HK$3.70 on Dec. 31 after controlling shareholders Richard Li and China Netcom announced the improved takeover offer price. It slipped to HK$3.54 on Monday. China Mobile, the world's largest wireless carrier, rose 4.7 percent, adding to Friday's 4.4 percent rally after Beijing finally approved the issuance of licences for new mobile networks. Smaller rival China Unicom gained 7.3 percent. China's Lenovo Group climbed 5 percent after the Chinese magazine Caijing said the world's No.4 personal computer maker was set to announce a major restructuring plan on Jan. 8 including changes of its top management. Metals PRECIOUS-Gold slips as dollar hits 3-week high vs euro LONDON - Gold slipped 1 percent in Europe on Monday as a stronger dollar weighed on sentiment with traders eyeing oil market moves on mounting Middle East tensions. Spot gold was quoted at $865.10/867.10 an ounce at 0925 GMT, down from $873.20 an ounce late in New York on Friday, having touched a session low of $860.20. U.S. gold futures for February delivery GCG9 fell $14.20 to $865.30 an ounce. "The crucial factor remains the developments in the oil market," said Dresdner Kleinwort consultant Peter Fertig. "Geopolitical tensions are again in the spotlight." "The dollar has strengthened compared to the levels we saw in mid-December," he added. The firmer dollar is weighing on prices, with the U.S. currency extending gains against the euro on hopes U.S. president-elect Barack Obama will unveil fresh measures to boost the economy. Obama is due to meet House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid later in the session to discuss their legislative agendas. The euro touched a three-week low against the U.S. currency, which is also benefiting from firmer stock market sentiment and a less hesitant attitude towards risk. Gold is often bought as an alternative investment to the dollar and tends to move in the opposite direction to it. Currency traders will be looking ahead to U.S. construction and vehicle sales data due out later in the session, November durable goods and factory orders data on Tuesday and key U.S. non-farm payrolls numbers on Friday. The precious metal had found good support in early trade as oil prices rose nearly 3 percent after an Iranian military commander called for an oil boycott over Israel's offensive in the Gaza Strip. However, it has slipped as oil gave up those gains. Gold usually moves in line with oil prices, both because firmer crude boosts interest in the precious metal as a hedge against oil-led inflation and increases the appeal of commodities as an asset class. Demand for gold jewllery has been hit by the higher prices. Sales in Abu Dhabi fell 40 percent in December from a month before, the emirate's industry group said. Gold buying in India, the world's largest market for the precious metal, has been crimped by higher prices, traders said. "People would want to buy if prices fall below 12,500 rupees," said Mayank Khemka, managing director of Delhi-based Khemka International. Prices are currently around 13,500 rupees. Fears over the outlook for the global economy lent powerful support to gold prices towards the end of last year. Gold was one of the only commodities to end the year with a slight gain, as investors flocked to buy the metal as a haven from risk. Among other precious metals, silver slipped in line with gold to $11.14/11.22 an ounce from $11.52 late on Friday. Platinum and palladium were steady, awaiting fresh direction from U.S. auto sales figures due out later on Monday. Both have been knocked sharply lower in recent months by fears over falling demand from carmakers, who account for more than half of global consumption of the metals. Spot platinum eased to $932/937 an ounce from $944, while palladium dipped to $186/191 an ounce from $190. Labels: Forex Analysis, Forex Trend, Market Analysis, Market Trend, Moving Average, World Market |
posted by Matbank at 3:38 PM
