Thursday, January 22, 2009
Jan-22 World Daily Markets Briefing
| by: ADVFN Newsdesk US Stocks at a Glance US Jobless Claims +62K To 589K In Jan 17 Wk; Survey +26K WASHINGTON -- The number of U.S. workers filing new claims for state unemployment benefits soared last week to match the quarter-century high reached in December, suggesting layoffs continued unabated into the new year. Initial claims for jobless benefits jumped 62,000 to 589,000 after seasonal adjustments in the week ended Jan. 17, the Labor Department said in a weekly report Thursday. That matches the highest level since November 1982, when claims were above 600,000. Claims were also at 589,000 in the Dec. 20, 2008 week. Economists surveyed by Dow Jones Newswires had expected claims would only rise by 26,000 last week. The four-week average of new claims, which aims to smooth volatility in the data, was unchanged at 519,250. A Labor Department analyst noted that claims tend to be volatile from November through January. Indeed, after falling over 100,000 at the end of December and into the first week of January to below 500,000, jobless claims have regained all those losses in the last two weeks alone. Last week was the first of the November-January period in which government statisticians expect a large drop in unadjusted claims. That type of decline didn't materialize, hence the rise in seasonally-adjusted figures. The Labor analyst said administrative backlogs at state offices may have been a factor. The data come after 12 months of declining nonfarm payrolls. Employers slashed payrolls at a rate of about half a million per month in the final four months of 2008, and another drop of that magnitude seems likely this month. The latest initial-claims data include the survey week for the January payroll report. When employers are surveyed for the monthly employment report, they are asked about staffing levels for the pay period that includes the 12th day of the month. For that reason, many economists pay close attention to the jobless-claims data for that week. Meanwhile the tally of continuing claims, those drawn by workers collecting benefits for more than one week in the week ended Jan. 10, swelled 97,000 to 4,607,000. The four-week average was the highest since November 1982, suggesting it is getting very tough for the unemployed to find new work. According to Thursday's report, the unemployment rate for workers with unemployment insurance held steady at 3.4%. Not adjusted to reflect seasonal fluctuations, Michigan reported the largest jump in new claims during the Jan. 10 week, 34,639, due to an increase in layoffs in automobile and manufacturing industries. South Carolina reported the largest decrease, 2,682, due to fewer layoffs in the industrial machinery, transportation equipment and manufacturing sectors. Forex Key US Dollar Libor Rises As Liquidity Dries Up LONDON - The cost of borrowing longer-term U.S. dollars in the interbank market rose Thursday as funding conditions in the money market continued to deteriorate amid concerns over the financial sector. Analysts at Royal Bank of Scotland said the realization of tight short dated cash and minimal term liquidity has sunk in, adding term liquidity for most names was "almost non-existent at any level." Market sentiment remained poor, said RBS, but should the upturn in global equity markets prove durable, it could stop the tone from worsening further. Data from the British Bankers' Association showed three-month U.S. dollar Libor, seen as a key gauge of the effectiveness of the Federal Reserve's monetary policy, rose to 1.15938% from Wednesday's fixing of 1.125%. The rate has fallen significantly, aided by aggressive monetary easing by the Federal Reserve, since peaking at 4.81875% on Oct. 10. The one-month Libor rate rose to 0.38938% from Wednesday's 0.35625%. Meanwhile, the overnight rate climbed to 0.21% from 0.1875%. The Fed funds target range now stands at zero-to-0.25%. The three-month BOR/OIS spread, a gauge of stress in the money markets, widened to 94.9 basis points from around 93 bps Wednesday. The spread has tightened significantly from its widest point of 366 bps, seen on Oct. 10 when interbank market tensions peaked. Lending rates in other currencies were lower across the board Thursday. Three-month sterling Libor fixed at 2.20125%, down from Wednesday's 2.2125%, while the one-month rate fell to 1.61875% from 1.63813%. The three-month rate has fallen steadily since peaking at 6.3075% on Oct. 1. Meanwhile, overnight sterling Libor slipped to 1.575% from Wednesday's 1.605%, remaining above the Bank of England's Bank Rate, currently 1.50%. Market expectations of further monetary easing by the BOE remained intact. Barclays Capital revised its U.K. interest rate call Wednesday, and now expects the BOE to cut its Bank Rate to zero by May. According to Sonia rates, the Bank Rate is expected to fall to 1.0% in February, and to base around 0.75% by mid-year. Euro Libor fixings were lower across all tenors Thursday. The key three-month rate fell to 2.25313% from Wednesday's fixing of 2.3075%, while the one-month dropped to 1.89875% from 1.95%. Meanwhile, the overnight rate tumbled to 1.15375% from 1.40625%, below the ECB's refinancing rate of 2.0%, and approaching the ECB's new deposit rate facility at 1.0%. Europe Shares European Shares Advance; Banks Lead Banks led an advance for European shares on Thursday, as the beaten-down sector regained some poise after this week's sharp sell-off, although worse-than-expected results from Nokia took the shine off early gains. The pan-European Dow Jones Stoxx 600 index advanced 0.4% to 185.26, rising after three straight sessions of losses. Banks weighed on the market in the early part of the week as investors fretted that deteriorating trading conditions will force lenders to write down more assets. "What has bought us under stress in the last couple of trading days is the fear that the financials' equity position will suffer as there will be further attempts to nationalize banks or further capital injections," noted Gerhard Schwarz, strategist at UniCredit. However, the sector took back some of those losses on Wednesday afternoon and again on Thursday, with Societe Generale shares up 5%, Credit Suisse (CS) shares up 9.3% and Santander (STD) shares up 3.2%. "After the sell-off, prices might bounce back from severe losses, and there is also the hope that there will be some new help provided which might not be as negative for existing shareholders as capital injections," said Schwarz. KBC Group shares stood out on Thursday, up 37.9% in Brussels, after the lender said that it has arranged to receive 2 billion euros of capital from Flemish government but that the deal won't dilute existing shareholders. On a national level, the French CAC-40 index rose 0.8% to 2,928.89, the German DAX 30 index climbed 1.2% to 4,312.52 and the U.K. FTSE 100 index rose 1.2%, to 4,108.50. Oil producers were strong as well in Europe, with BP (BP) shares up 1.7% and Total (TOT) shares up 2.3% as light sweet crude oil futures traded over $44 a barrel in electronic trading. However, shares were off early highs in Europe as Nokia Corp. (NOK) shares dropped 6.6% after reporting a 69% drop in fourth-quarter earnings. Nokia also shaved its estimates for margins and industry-wide mobile sales in 2009. "We must expect that the economic weakness will bite on corporate profitability," noted Schwarz at UniCredit. "Now the hope is probably that the worst momentum of the downturn is where we are right now. The critical thing is to bridge the time until we see the trough in leading indicators. There might be some rocky times over the next couple of weeks," he added. BT Group details charge Fiat shares also fell sharply on weak numbers, down 10.3%. It now only expects a group net profit of over 300 million euros in 2009, after dramatically slashing its target for trading profit - or operating earnings before asset disposals, restructuring costs or other one-time items - to 1 billion euros from a previous target range of 3.4 billion euros to 3.6 billion euros. The firm also cut its 2008 dividend and halted its share buyback program. BT Group shares dropped 10.9% as it's going to take a 340 million pound ($471.7 million) charge in its global services unit as a result of financial and contract reviews. Shares of low-cost airline easyJet climbed 11%. First-quarter revenue rose 32% to 550 million pounds after a strong performance across its network. First-half revenue is expected to exceed guidance, the firm added. Asia Markets Asian Shares End Higher; Banks, Japan Real Estate Cos Up Asian stocks ended higher Thursday, with financials trading on a firmer note, while real-estate developers were standouts in Tokyo after the Bank of Japan released details of its plan to inject liquidity into the economy. Analysts said stocks were rebounding from oversold conditions, with direction provided by U.S. gains overnight, although volume was limited ahead of the Lunar New Year holiday. "I think it's just a trading market, concerns over the economy will remain for some time," said Marco Mak, head of research at Tai Fook Securities in Hong Kong. Citigroup cautioned in a research note Thursday that corporate earnings globally are in the early stages of a recession that could last four to six quarters before recovering. "We are in the midst of what will probably be the deepest global earnings recession in over 40 years," wrote Citi strategists. Mitsubishi Estate was part of a broad rally in the Japanese real-estate sector after the Bank of Japan said it will accept bonds issued by real estate investment trusts, or REITs, as collateral for loans. The announcement came as the BoJ's policy board vote unanimously to keep interest rates unchanged at 0.1%. Mitsubishi Estate shares ended 5.4% higher. South Korea's Kospi Composite ended up 1.1%, while Australia's S&P/ASX 200 added 1.3% and New Zealand's NZX-50 gained 1.1%. Hong Kong's Hang Seng Index finished 0.6% higher. Markets in Taiwan were closed for a public holiday. Japan's Nikkei 225 ended up 1.9% after a choppy session which saw the index fall nearly 1% at one point. "(Foreign exchange) concerns will continue to limit the Nikkei's upside" with the yen solidly higher for January, said Yumi Nishimura, a market analyst at Daiwa Securities SMBC. A stronger yen makes Japanese goods less competitive on global markets. Among Japanese exporters, Toyota Motor fell 4.2%, Nissan Motor 3.6% and Canon 1.7%, with data showing exports in the country sank 35% in December from a year earlier, the third-straight month of declines. The BoJ's announcement that it would buy up to 3 trillion yen ($33.5 billion) of commercial paper and asset-backed commercial paper through the end of fiscal year in March helped spark late-afternoon support for the Nikkei. Overall volume for Asia was low. "The overnight gain in the U.S. markets seemed to be a technical rebound, and is likely to have a limited positive impact on local stocks," said Lee Jin-woo at Mirae Asset Securities in Korea. EBay however dropped 5.8% in late trade as its fourth-quarter net income fell 31%. The online auctioneer issued a first-quarter view below analyst estimates. "We remain bearish on risky assets in the near term. We think weak economic data globally and poor profit reports will continue to weigh" on sentiment, said analysts at Calyon. Banking stocks were a bright spot in Asia. In Australia, National Australia Bank gained 2.8% and Westpac Banking 3.3%. Japan's Nomura Holdings added 4.3% while South Korea's KB Financial rose 4.2%. In India, ICICI Bank was up 2.8%. In Hong Kong, HSBC added 3.6%, after falling 26% over the eight previous sessions. Sony fell 2.6% in Tokyo as the company said it would close one of two domestic TV manufacturing plants. After trading closed, the company said it now expects a group net and operating loss for this fiscal year, and it cut its planned capital spending, citing a strong yen. Gains in South Korean shares were limited by data showing the economy put in its worst performance in almost 11 years in the fourth quarter. Gross domestic product fell a seasonally adjusted 5.6% from the previous three months. Kia Motors fell 2.5% even as fourth quarter net profit jumped 97% from a year earlier, helped by a weaker won. Hyundai Motor lost 2.9% with its fourth quarter net profit falling 28% from a year earlier to 243.6 billion won ($170 million), lower than 569.8 billion won forecast in a Dow Jones Newswires poll. LG Electronics shed 3.7% after it swung to a fourth-quarter net loss, weighed down by hefty declines in its flat-screen panel unit. The 671.3 billion won loss at Korea's second-largest electronics maker was worse than the market expected. In Hong Kong, markets were higher but trade was winding down before the Chinese New Year holiday next week. "Trading interest is unlikely to be strong and investors may sell into strength if stocks shoot up after their recent sharp declines," said Conita Hung at Delta Asia Securities. The Shanghai Composite Index added 1%, with gains in healthcare stocks after Beijing said it would spend more than $120 billion over three years on the sector. Shinva Medical Instrument added 7.7%. Markets in China shrugged off news that the economy grew 6.8% in the fourth quarter of 2008, the lowest quarterly growth rate in seven years. India's Sensex was up 0.3% in late trade as Reliance Industries traded basically flat before its third quarter results later Thursday. Singapore's Straits Times Index was 0.3% higher with Malaysian shares up 0.6%, stocks in the Philippines 1.3% higher and Indonesia easing 0.2%. Thai shares were up 2%. Labels: Forex Analysis, Forex Trend, Market Analysis, Market Trend, money trading, World Market |
posted by Matbank at 11:44 PM
