US & World Daily Markets Financial Briefing 13-03-2008

Welcome to the Investors Hub World Daily Markets Bulletin; your daily e-mail guide to important Domestic, European and Global market events. Market Briefing is here to keep you informed and up-to-date on key financial developments.

If you have forgotten your password, click here.

Stocks swoon as dollar falls, gold jumps

NEW YORK - Stocks tumbled Thursday as investors recoiled at a further decline in the dollar, spikes in gold and oil prices and a warning that a Carlyle Group fund is near collapse. The major indexes each lost more than 1 percent; the Dow Jones industrial average at times fell more than 200 points.

Talk of regulatory changes for the mortgage industry did little to dislodge Wall Street's glum mood. Treasury Secretary Henry Paulson outlined a plan Thursday to provide stronger oversight of mortgage lenders, whose lax standards are blamed for touching off the concerns about souring debt that have led to turmoil in the credit markets.

Investors appeared doubtful that regulatory changes at this point would give the economy the immediate boost it needs. Consumers are paring back their discretionary spending by more than many anticipated -- a government report Thursday said retail sales fell in February after the market predicted an increase.

"Things just aren't good for the consumer, and thus, they're not good for Wall Street," said Kim Caughey, equity research analyst at Fort Pitt Capital Group.

Meanwhile, no one is positive which companies and which investors are going to end up losing money if more funds collapse. "It is going to be difficult to see who has the Old Maid card. And time will tell," Caughey said.

Carlyle's troubles heightened worries about the billions of dollars in depressed mortgage-backed securities. Carlyle Capital Corp., which is managed by Carlyle Group, warned late Wednesday it expects creditors will seize the fund's remaining assets after unsuccessful negotiations to prevent liquidation. World markets shuddered last week after the Amsterdam-listed fund missed margin calls from banks on its $21.7 billion portfolio of residential-mortgage-backed bonds.

The U.S. currency continues to tumble, while gold and energy prices keep surging. The dollar dropped the fresh lows against the euro and fell below 100 yen during Asian trading Thursday, the weakest level for the dollar against the Japanese currency in 12 years. Gold surpassed the psychological benchmark of $1,000 an ounce for the first time, and crude oil briefly passed $111 a barrel.

In mid-morning trading, the Dow fell 142.38, or 1.18 percent, to 11,967.86. Broader stock indicators also fell. The Standard & Poor's 500 index lost 15.18, or 1.16 percent, to 1,293.59, and the Nasdaq composite index fell 27.63, or 1.23 percent, to 2,216.24. Bond prices rose as stocks fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.42 percent from 3.44 percent late Wednesday.

Thursday's stock decline follows moderate losses Wednesday and a 416-point rally Tuesday. Analysts in the United States noted Wednesday that the U.S. housing market remains in tatters, while inflation is a growing threat to consumer spending that is already showing signs of weakness. While the Fed's plan to make more money available to financial institutions can help, it won't solve the many deepening economic problems in the United States.

The dollar's slide is of particular concern because it is helping to send commodities prices including oil to greater highs -- in turn feeding the growth of inflation. Light, sweet crude 78 cents to $110.70 on the New York Mercantile Exchange, after briefly breaching $111 a barrel.

The Fed's Open Markets Committee meets next Tuesday and is widely expected to lower interest rates, with many analysts forecasting a drop of 0.50 percentage point. However, in the past few weeks investors have been questioning whether another rate cut will help the economy.

The Commerce Department's report of a 0.6 percent decline in retail sales for February was unnerving for investors because consumer spending accounts for more than two-thirds of U.S. economic activity. A pullback among consumers worried about jobs, falling home prices or rising energy costs could hasten the economy's slowdown.

In other economic findings, the Labor Department said the number of workers seeking unemployment benefits was unchanged last week. A government report released last week said employers cut payrolls by 63,000 in February -- the second straight month of losses -- and sent a wave of unease across Wall Street. Some economists regard back-to-back declines in monthly payrolls as a sign the economy won't be able to avoid recession.

Declining issues outnumbered advancers by nearly 5 to 1 on the New York Stock Exchange, where volume came to 501.8 million shares.

The Russell 2000 index of smaller companies fell 7.31, or 1.10 percent, to 660.00. Overseas, Japan's Nikkei 225 index tumbled 3.3 percent to its lowest level in 2 1/2 years. In afternoon trading, Britain's FTSE 100 fell 2.11 percent, Germany's DAX index slid 2.60 percent, and France's CAC-40 lost 2.73 percent.

Subscribers benefit from features such as: advanced search and reading functionality.
Click here for all the action.

Forex - Dollar remains in the doldrums on fragile risk appetite

LONDON - The dollar remained woefully weak as renewed gloom about the financial sector weighed on risk appetite, with the yen trading to its highest level against the US currency for 12 years. News that a major US hedge fund is unable to meet margin calls fuelled a renewed bout of risk aversion on Wall Street yesterday which has pervaded through to European markets this morning.

Analysts said market players are becoming increasingly pessimistic about how well placed the Fed is to improve conditions in the credit markets, with the relief following Tuesday's coordinated central bank money market operations fading fast.

"The ability of Fed interest rate cuts and liquidity injections to support risky assets is diminishing rapidly, as underlined by the temporary and limited response of markets to the liquidity measures announced on Tuesday," said analysts at Barclays Capital.

This pessimism has caused the dollar to fall below 100 yen for the first time in 12 years as investors looked to safe-haven currencies to act as a store of value, although it has since clawed back some of its losses. "This is a market that is focused on risk more than return and sentiment remains significantly negative that the market is wary about taking on board excessive risk," said Divyang Shah at Commonwealth Bank.

Later today comes the release of the weekly US jobless claims figures, along with preliminary retail sales for February. The retail sales figures are expected to bring fresh gloom about the US high street, with growth seen slowing to 0.2 pct from January's 0.3 pct.

"After two consecutive months of negative payrolls, all we need to tick the final box on the recession checklist is some very weak sales data - it is possible that this is on its way today," said Rob Carnell at ING. The Swiss franc was another focus of safe-haven buying, with the dollar hitting a low of 1.0043 sfr, sparking talk of a breach of parity.

Meanwhile, the euro remained in buoyant mode, reaching a fresh all-time high of 1.5625 usd with the European Central Bank still not giving any hint that its focus will move from combating inflation to shoring up growth by cutting interest rates.

Yesterday, ECB president Jean-Claude Trichet described recent movements in currency markets as "excessive" but investors are doubtful whether the central bank will intervene to stem the currency's ascendancy anytime soon.

"There is nothing new in Trichet's rhetoric so far, and the single currency continues to trade imperviously to verbal intervention by policymakers and business leaders alike," said Manuel Oliveri, currency strategist at UBS.

Finally, the pound was firmer, boosted by a survey showing inflation expectations among the UK public hit record levels during February, further denting the case for any near-term interest rate cut from the Bank of England.

The quarterly survey by the BoE showed inflation expectations for the coming year climbed to 3.3 pct in February, the highest level since the survey began. "This will clearly spook the Monetary Policy Committee, increasing the chances that interest rates will remain on hold in April and perhaps even May too," said Paul Dales, UK economist at Capital Economics.

For stock market quotes, company information, stock charts, historical quarterly reports and historical annual reports, click here

Euroshares under pressure midday as Dow seen adding to losses

At 12.15 GMT, the STOXX 50 was down 61.03 points, or 1.97 pct, at 3,036.46 and the STOXX 600 was down 5.89 points, or 1.89 pct, at 305.59. April dated WTI crude was trading at 110.23 usd per barrel, just shy of an all-time high of 110.24. And the euro was at 1.5591 usd at the time of writing, just below a new high of 1.5624.

In Europe, financials led the fallers as yesterday's rally ran out of steam amid report Carlyle Capital Corp expects its creditors to seize all of the fund's remaining assets after unsuccessful negotiations to prevent its liquidation triggered further selling.

This new weakness on global markets and disappointing numbers from Unicredit kept investors on the sidelines. Italy's largest bank reported disappointing full-year profit, operating profit and revenues. Shares fell 1.91 pct.

"For now, the integration with Capitalia is destroying value. Maybe in a year's time UniCredit will manage to turn Capitalia around and it will create more value than it has lost, but right now the only thing that the market does not have is time," a dealer said.

Deutsche Boerse was pressured by a flurry of rumours that UBS was either placing shares in the exchanges operator or selling its stake, although few believed the chatter.

Among other financials Axa fell 3.71, Societe Generale lost 4.4 pct and UBS fell 4.3 pct. BMW was down 5.98 pct after the German car group released full-year earnings results ahead of schedule, which were largely in line with expectations while earnings per share for the fourth quarter disappointed.

And VW was 1 pct lower after its two month sales update. "It looks like a strong performance in the auto unit was offset by a weakness in financial services," analyst Michael Tyndall at Nomura said. "Adjusted earnings per share for the fourth quarter is about 3 pct below consensus," he added, also noting that the full-year results were largely in line.

Turning to M&A related news, Continental AG shares were down 6.61 pct despite denying a report in Hannoversche Allgemeine Zeitung, which said that the integration of Siemens' VDO unit will be more costly than the German automotive supplier initially expected.

Meanwhile, Telecom Italia rebounded after four consecutive days of declines as the selling pressure eased following reports Royal Bank of Scotland has been liquidating the 3.7 pct stake it held in the group as collatoral for a loan to Hopa. Deutsche Bank said forced selling and analysts' downgrades are likely to be close to an end. The shares trade at over a 20 pct discount to the sector and the broker thinks most possible bad news is now priced in.

In other news this morning, Nestle climbed 4.5 pct after the food giant lifted its 2008 growth forecasst. It said it expects organic sales growth in 2008 to be "close" to the prior year's levels. ABN Amro repeated its 'buy' rating, saying it cannot remember the company ever being this bullish so early in the year. The broksr said it had been looking for 6.2 pct growth, and it believed it was at the top of the range.

Last year, Nestle reported organic growth of 7.4 pct. The news helped to bolster Danone and Unilever, up 0.89 pct and 1.88 pct respectively. TUI AG was trading 0.67 pct higher amid reports that Neptune Orient Lines (NOL) is still interested in acquiring the group's Hapag-Lloyd unit.

Swiss travel group Kuoni added 1.79 pct after the company posted better-than-expected full-year results and said it is "cautiously optimistic" about the prospects for 2008.

Fast-loading, feature-rich and highly customizable interfaces for reading and posting messages. click here

Asian markets slide on oil surge, Carlyle news; Hong Kong leads selloff

Japan's benchmark Nikkei index closed down 3.3 percent at 12,433.44 and the broader Topix declined 3.1 percent to 1,215.87, with exporters taking a hit after the yen surged.

Hong Kong's Hang Seng Index closed down 4.79 percent at 22,301.64, off a low of 22,251.24 and high of 23,007.61, ending three days of gains, with sentiment also hurt by concerns China will move towards further monetary tightening to control inflation that soared to a near 12-year high in February.

The Shanghai Composite Index closed down 2.4 percent at 3,971.26 and Taiwan's weighted index fell 2.7 percent to close at  8,210.99. China's central bank has already warned interest rates may continue to go up to curb the rise in consumer prices.

In Australia, the S&P/ASX 200 fell 2.3 percent to 5,135.9 and the All Ordinaries slid 2.2 percent to 5,215.7, led by the financial sector. Elsewhere in the region, South Korea's KOSPI fell 43.21 points or 2.6 percent to 1,615.62, its biggest single-day point drop in a month.

The Singapore Straits Times finished down 3.9 percent at 2,805.55. The Kuala Lumpur Composite fell 2.5 percent to close at 1,201.35 and the Philippine Composite finished down 0.4 percent at 2,940.47. The Jakarta composite closed down 4.5 percent at 2,440.59. China Railway bucks trend

Defying a weak market, China Railway Construction rose on its trading debut in Hong Kong. The stock closed at 12.00 Hong Kong dollars, up 12 percent from its initial public offering price of 10.70 dollars, in line with market expectations.

Toyota Motor was down 160 yen or 3 percent at 5,250 yen, Honda Motor fell 130 yen or 4.2 percent to 2,940, and consumer electronics giant Sony dropped 180 yen or 4 percent to 4,300.

Shares of Toshiba Corp lost 14 yen or 1.9 percent at 720 after the Nikkei newspaper reported that the electronics giant is expected to incur losses of as much as 100 billion yen this year as it shuts down its HD DVD business after losing to rival Sony's Blu-ray format.

Financial stocks led the Australian market lower. National Australia Bank fell 1.08 dollars or 3.8 percent to 27.27 Australian dollars, Commonwealth Bank of Australia declined 2.32 dollars or 5.6 percent to 39.50 dollars, ANZ lost 58 cents or 2.6 percent to 21.47 dollars, while Westpac Banking was 62 cents or 2.8 percent lower at 22.64 dollars.

Crude oil prices passing 110 US dollars per barrel overnight hit transportation stocks such as Qantas Airways, which fell 4.2 percent to 3.65 dollars.

In Hong Kong, Cathay Pacific Airways lost 4.7 percent to 15.00 dollars, Air China Ltd was down 7.7 percent to 6.22 dollars and China Southern Airlines fell 9.7 percent to 6.23 dollars.

The Bombay Stock Exchange's 30-share benchmark Sensex closed down 770.63 points, or 4.78 pct, at 15,357.35 points and the National Stock Exchange's 50-share S&P CNX Nifty closed down 248.40 points, or 5.10 pct, at 4,623.60.

The most traded market in the world; 24 hr market platform with the latest news, prices and charts gives you the knowledge to invest in this exciting and fast moving market.
Click here

Metals - Gold hits record as bad US data keeps dollar low, 1,000 usd in sight

LONDON - Gold prices hit a record 997.58 usd after more poor US data kept the dollar near lows against several major currencies, as high oil prices sparked inflation fears, and as players once again shied away from risk and headed towards safer assets.

The number of people in the US continuing to look for work increased for the fourth week in a row to a high not seen in nearly two and a half years, the Labor Department said today. While weekly claims have moderated somewhat, the number of people continuing to look for work is still on the rise, something economists have seen as yet another sign of a slowing economy.

Meanwhile, US consumers piled on another piece of evidence that the economy is in or was heading for a recession last month as sales fell across almost the entire range of retailers. The Commerce Department said February retail sales plunged 0.6 pct, as auto dealers and gasoline stations, as well as "core" retail outlets, reported major declines.

Both pieces of data helped keep the dollar at lower levels. A weaker dollar has triggered gold buying as the metal has become relatively cheaper for those trading in other currencies. The dollar fell below 100 yen to reach a 12-year low this morning, while the euro hit a new record high above 1.56 against the US currency, as recession fears sparked a fresh bout of risk aversion.

The market has been calling for the metal to hit 1,000 usd for some time now, on credit market worries -- which see investors head towards safer assets like bullion -- a record oil price, a gloomy outlook for the dollar and some supply tightness.

"The remaining bets have now shifted to what hour the gold price might overcome the four-digit number, as opposed to which day," said Kitco analyst Jon Nadler. Meanwhile, bullion trades in the same direction as oil prices, which hit a record above 110 usd per barrel today, as investors hedge against inflation.

At 12.49 pm, gold was trading at 994.35 usd per ounce against 979.00 usd in late New York trade yesterday. Looking ahead, gold is likely to take direction from the dollar and more signs of economic weakness. "The dollar is indeed falling, and the propensity on the part of speculators to buy commodities in a knee-jerk response is high," said Dennis Gartman, editor of The Gartman Letter.

Elsewhere, investment into the entire commodity complex is helping gold. Players favour commodities against equity markets, as raw materials are offering them better returns, for now. Also, players are betting on the likelihood of an aggressive US Federal Reserve interest rate cut on March 18, because the Fed's 200 bln usd liquidity injection has failed to ease credit market tensions. Such a move should weaken the dollar and support gold.

Silver followed gold's path higher to trade at 20.60 usd an ounce against 19.89 usd yesterday. Among other precious metals, platinum rose to 2,096 usd an ounce against 2,064 usd, while palladium held steady at 506 usd per ounec.

The latest streaming prices and news on major commodities from precious metals to crude oil, so you can keep up-to date and never miss a trading opportunity again.
Click here

Investors Hub Services