US & World Daily Markets Financial Briefing 01-04-2009

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Major Averages Stuck Firmly In Negative Territory

After moving sharply lower at the open, stocks have seen continued weakness over the course of the first half-hour of trading on Wednesday. While the major averages have not seen much follow-through on their initial downward moves, they have remained firmly negative.

With traders reacting to weak employment data, most of the major sectors have come under pressure. Healthcare, electronic storage, and real estate stocks are posting notable losses, while gold stocks are among the only groups bucking the downtrend.

The major averages have moved roughly sideways in recent trading, stuck well below the unchanged line. The Dow is currently down 103.63 at 7,505.29, the Nasdaq is down 28.12 at 1,500.47 and the S&P 500 is down 12.94 at 784.93

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Dollar broadly lower

The dollar fell against the euro and gained against the yen on Tuesday as Wall Street packed in some good gains.

The dollar index, which measures the greenback against six other currencies, fell to 85.567 in late US trade from 85.712 the previous session.

Renewed risk appetite increased demand for the euro but kept the dollar and yen under pressure.

The Japanese yen was broadly lower as the country’s financial year comes to a close while more gloomy economic data put further pressure on the currency.

The dollar is expected to receive support from nerves ahead of Thursday’s G20 meeting as global leaders meet in London to discuss the financial crisis.

Hopes are running high that leaders will agree on recovery measures for the global economy. However a failure to agree on measures is likely to prompt safe haven flows into the dollar.

Sterling advanced against the broadly weaker dollar on Tuesday. The UK currency was boosted by a surprisingly robust consumer confidence reading. This follows an encouraging report on the UK housing market which suggested the housing market may have bottomed out, as prices fell at their slowest pace in 10 months. Sterling was up 0.3% at $1.4276.

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Banking and oil shares fall

Europe’s main markets are still down in midday trade, with energy and banking shares among the leading fallers.

All eyes are on London today as the G20 summit of the world’s largest economies gets underway.

Divisions within the G20 already appeared to be emerging, with the UK and US favouring further fiscal stimuli to breathe life back into the global economy and countries such as France and Germany looking for tighter banking regulations.

"A lot of people, particularly the Anglo-Saxons, were very much in favour of deregulation," said Germany’s finance minister Peer Steinbrueck. "I think this deregulation and very cheap money is responsible for what we are facing now."

Reports also suggest that France’s President Sarkozy would be willing to walk out of the summit if his demands for more to be done to rein in the market excesses he blames for the current crisis were not addressed.

Energy giant Royal Dutch Shell and French peer Total are both lower, in line with the falling crude oil price.

Banking shares are also among the main fallers. French bank Societe Generale dropped after it said Tuesday that it expects to book further write-downs.

Swiss peer UBS said it will hire Ulrich Koerner as chief operating officer. Koerner most recently headed the Switzerland region for rival Credit Suisse.

Across the markets, the German DAX has fallen 35 points to 4,048, the French CAC is down 28 points at 2,778, while the Swiss market dropped 26 points to 4,900.

Unemployment across the 16-country eurozone rose more than expected in February as the economic downturn continues to bite. The jobless rate rose to 8.5%, or 13.486m, up from January's upwardly revised 8.3%, according to figures published by European Union statistics office Eurostat. Analysts had expected a rate of 8.3%.

Among the member states, the lowest unemployment rate was recorded in the Netherlands (2.7%), and the highest rates in Spain (15.5%), Latvia (14.4%) and Lithuania (13.7%).


CAC 40 - Risers

1. Renault (RNO) € 16.41 +5.97%
2. Peugeot (UG) € 14.75 +3.58%
3. Suez Environnement Company (SEV) € 11.41 +3.02%
4. PPR (PP) € 48.93 +1.35%
5. EADS (EAD) € 8.87 +1.28%
6. Essilor International (EI) € 29.45 +1.20%
7. Credit Agricole (ACA) € 8.39 +0.94%
8. Carrefour (CA) € 29.56 +0.54%
9. Vinci (DG) € 28.07 +0.41%
10. BNP Paribas (BNP) € 31.22 +0.32%

CAC 40 - Fallers

1. Lafarge (LG) € 32.38 -4.46%
2. Societe Generale (GLE) € 28.33 -3.97%
3. Dexia (DEXB) € 2.51 -3.46%
4. GDF Suez (GSZ) € 25.02 -3.19%
5. Alcatel-Lucent (ALU) € 1.38 -2.75%
6. Total (FP) € 36.52 -2.42%
7. Sanofi-Aventis (SAN) € 41.40 -2.31%
8. Pernod Ricard (RI) € 41.10 -2.10%
9. EDF (EDF) € 28.92 -2.07%
10. Vallourec (VK) € 68.57 -1.78%

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Nikkei up despite Tankan survey

The Nikkei advanced around on Wednesday, with carmakers bringing the biggest gains, on hopes that a decision on the future of the US car giants General Motors and Chrysler will be made shortly.

The gains came despite increasing expectations that car giants will file for insolvency.

Shares in Honda rose 6.3% in Tokyo while Toyota jumped 4.8%. Nissan advanced 6.3%.

In economic news the latest Tankan survey provided little cheer after it showed business confidence fell at its fastest rate on record.

Elsewhere shares in Elpida Memory surged nearly 15% to 780 yen after it confirmed the group had been chosen as a memory partner with Taiwan Memory in a deal supported by the Taiwan government.

The benchmark Nikkei 225 index closed up 242 points at 8,351.

The Hang Seng wavered in and out of negative territory as China Unicom weighed while shares in BOC Hong Kong soared.

China Unicom was one the biggest decliners on concern about the group’s spending plans.

Among financials shares BOC Hong Kong jumped 9.7% after its parent Bank of China announced it would increase its stake in the unit, currently at 66%, over the next year.

Cnooc rallied nearly 4% as the price of crude advanced overnight.

The Hang Seng was down 41 points at 13,534 in Hong Kong.

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Crude edges towards $50

Oil prices rose on Tuesday, tracking gains on Wall Street, as financials dusted off the previous session’s losses and commodity stocks enjoyed a broad recovery.

Gains came despite economic data showing a slump in US house prices while a Consumer Confidence Index report showed a slight rise in March from the previous month.

US light crude oil for May delivery rose $1.49 to settle at $49.90 a barrel on the New York Mercantile Exchange.

The weaker dollar also underpinned demand for crude which had fallen by almost $4 a barrel in the previous session.

Overall sentiment was high on Tuesday as Wall Street posted its best monthly performance in six years.

However traders will be keeping a sharp eye on weekly government inventory data which is due out Wednesday. The data is expected to show another build on crude oil stockpiles which are already at a 16-year high.

Gold prices shrugged off its recent losing streak, with the June contract rising $7.30 to $925 an ounce. The weaker dollar buoyed interest in the yellow metal, increasing its appeal as an alternative investment.

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