US & World Daily Markets Financial Briefing 18-06-2008

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.

US STOCKS-Market opens lower on FedEx, banks

NEW YORK - U.S. stocks fell on Wednesday, with the S&P down more than 1 percent, after Morgan Stanley Dow Jones industrial average DJI was down 114.63 points, or 0.94 percent, at 12,045.67. The Standard & Poor's 500 Index was down 13.29 points, or 0.98 percent, at 1,337.64. The Nasdaq Composite Index was down 26.20 points, or 1.07 percent, at 2,431.53.
 
U.S. crude oil stocks fell by 1.2 million barrels last week, against analyst expectations for a fall of just 700,000 barrels, marking the fifth weekly inventory decline in the world's largest
energy consumer.
   
Gasoline stocks fell against market expectations in the week to June 13, dropping by 1.2 million barrels against calls for a rise of 1.1 million barrels.  Meanwhile, distillates, including heating oil, increased by 2.6 million barrels, far more than the 1.5 million barrel rise expected.
   
The refinery run rate increased to 89.3 percent of their operable capacity from 88.6 percent the previous week, against analyst predictions for a 0.3 percentage point rise.  The U.S. Energy Information Administration -- the statistical arm of the Department of Energy -- released the data at 3:35 p.m BST.

Shares of regional banks slumped Wednesday with Fifth Third Bancorp. plunging to a 13-year low after the Cincinnati-based bank said it will slash its dividend and raise $2 billion to shore up its capital position.

Several credit ratings agencies moved to downgrade the bank's debt and equity ratings following the announcement. Regional banks also fell on losses in the broader financial sector after Morgan Stanley earlier reported second-quarter revenue that fell short of Wall Street's expectations.

The Regional Bank Holdrs ETF (RKH) tumbled 3.4% to $96.15 in recent trading, after earlier falling as much as 3.7% to $95.85, the lowest level since April 2003. Trading volume jumped to 966,100 shares in the first 45 minutes of trading, above the issue's 30-day average daily volume of 844,757 shares.

Shares of Fifth Third plunged nearly 20% to $10.36 in intraday, the worst level since May 1995, after the bank said it plans to raise $1 billion through a preferred stock offering, cut its dividend to 15 cents from 44 cents and generate another $1 billion through the sale of non-core businesses.

The stock last traded down 15.6% at $10.75. Volume of 20.3 million shares was nearly double the 30-day average of around 11 million shares. Fitch Ratings downgraded Fifth Third's long-term and short-term issuer default ratings, citing the company's deteriorating trends in asset quality, expectations for elevated levels of problem assets in the near term, and a decline in profitability.

Standard & Poor's equity downgraded the bank to sell from hold, estimating that the company will need $1.9 billion of loan-loss provisions in 2008 compared with $628 million in 2007.

Moody's Investors Service placed the long-term deposit and debt ratings of Fifth Third and its subsidiaries on review for possible downgrade, saying  "much of the deterioration in Fifth Third's key credit fundamentals -- including risk-adjusted profitability and efficiency -- is likely to be permanent."

Elsewhere, shares of SunTrust Banks Inc. slumped 8.4% to $37.19 after Morgan Keegan lowered its fiscal 2008 and 2009 earnings estimates, saying "our conviction level has decreased around the timing and deterioration in credit."

Among the ETF's other components, shares of Wachovia Corp. tumbled 5.1% to $16.29, while Comerica Inc. slumped 7.6% to $29.01 and Piper Jaffray Cos. dropped 5.1% to $35.61. Regions Financial Corp. plunged 13% to $11 and Marshall & Ilsley Corp. declined 6.9% to $16.96.

The regional bank sector has come under heavy pressure in recent sessions after analysts raised concerns of capital adequacy at some poorly-positioned players and said they expect to see more capital raising and dividend cuts.

A number of regional banks including National City Corp., Wachovia Corp., and KeyCorp. have announced dividend cuts this year, putting pressure on their shares. The regional bank ETF has declined about 27% since the beginning of the year and 22% since the end of April.

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

Forex - Pound softens as BoE minutes muddle rate outlook

LONDON - The pound softened somewhat after the publication of the minutes to the Bank of England's last policy meeting showed little coherence among UK rate-setters over what to do with monetary policy.

The minutes showed both a rate hike and a cut were discussed, with one vote for a cut and the majority voting for unchanged rates. The result raises the likelihood that the next meeting will be a three-way split, making the outlook for interest rates particularly unpredictable.

"While the BoE appears to have no clear commitment on the next move in the Bank rate, inflation concerns suggest that, if the Bank were to move in the next few months, it would probably be a hike," said Matthew Sharratt at Bank of America.

However, this would go against the mood of comments by BoE governor Mervyn King in his letter to the Treasury on Tuesday, where he said it would not be prudent to raise rates at a time when the economy was slowing so sharply.

Markets have turned pessimistic on the pound's future, as the longer inflation keeps the BoE from cutting rates, the deeper the economic downturn will be. Conversely, any rate hike could be one blow too many for an ailing economy.

Hans Redeker at BNP Paribas noted how the pound fell on Tuesday after CPI inflation came in above expectations, suggesting the relationship between inflation and currencies is breaking down. "In the midst of the slowing economic activity, the market interpreted the deteriorating UK inflation outlook as one that was negative for pound assets," he said.

More mixed economic news came today from the Confederation of British Industry's survey of manufacturing activity, which showed a surprise increase in new orders, although prices remained near their 13-year high.

The euro, meanwhile, has fallen to daily lows against the dollar as a lack of economic data on either side of the Atlantic has left trading sensitive to technical flows.

The European Central Bank is widely expected to increase interest rates next month, although policymakers are now trying to rein in expectations of a series of hikes. U.S. policymakers have similarly suggested rates may need to raised, although reports this week have suggested the Federal Reserve remains more concerned with lower growth than price pressures.

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

Euroshares fall on Wall St losses; Asia recovery offers some relief

At 08.54 a.m., the DJ STOXX 50 was down 20.17 points, or 0.68 percent, at 3,005.5 and the DJ STOXX 600 was down 2.19 points, or 0.71 percent, at 304.15.

Shares in Goldman Sachs fell along with shares in other banking stocks after the broker released a downbeat sector note in which the broker suggested credit losses from deterioration in the mortgage and lending markets will not peak until early 2009, and that U.S. banks will need to raise an additional $65 billion.

In Europe, the Telegraph reports that RBS strategists echoed the gloom, suggesting the S&P 500 could fall by more than 300 points by September and advising clients to brace for a fully-fledged crash in global, stock and credit markets.

Financial stocks dominated the fallers board accounting for six of the ten largest percentage falls on the DJ STOXX 50 with Societe Generale down 1.35 percent, Deutsche Boerse down 1.67 percent and Fortis down 1.96 percent.

Also weighing was France Telecom, down 1.75 percent after reports it is considering raising its informal takeover offer for TeliaSonera, the Financial Times reported.

France Telecom shares fell more than 5 percent on the day the group first launched its bid for the Nordic group, as analysts feared it would have to lift its bid and questioned the logic of the deal.

Heavyweight oil companies were lower after falls in the price of crude. Eni was down 1.13 percent, Repsol was down 0.97 percent and BP was 0.95 percent lower. And Scandinavian paper groups tumbled after gloomy updates from Stora Enso, down 4.87 percent, and UPM-Kymmene, down 3.21 percent.

But utilities fared better as investors sought safety and thanks to a bullish note from Lehman Brothers, in which it lifted its price targets for EON, up 1.21 percent, RWE, up 0.29 percent, Fortum, up 2.35 percent and EDF, up 1.52 percent.

In earnings news, Hennes & Mauritz stormed 6.25 percent higher as analysts cheered the group's "strong" second quarter performance and good May sales data.

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

Asian stocks mostly higher, led by rebound in China market

Oil dipped below $134 a barrel in Asian trade on Wednesday ahead of an expected output increase by key producer Saudi Arabia.

The Shanghai Composite Index closed up 5.2 percent at 2,941.11 as investors regarded the index as having been oversold. Speculation of imminent government intervention to support the stock market, which has fallen over 50 percent since its highs last October, also supported the rise.

"Impressive gains in Chinese shares boosted overall sentiment towards the close," said Park Seok-hyun, an analyst at Eugene Investment & Securities in Korea.

The KOSPI closed up 1.3 percent, the biggest percentage gain in nearly three weeks, at 1,774.13. "The rebound in the Chinese stock markets today helped improve overall market sentiment in Hong Kong," said Castor Pang, strategist at Sun Hung Kai Financial.

The Hang Seng index finished with a gain of 1.16 percent at 23,325.80, led by a rally in oil refiner China Petroleum & Chemical Corp (Sinopec) on optimism about its future earnings.

Gains in resource stocks also led to a higher close in the Australian market after a see-saw session. Data from China showing that investment in fixed assets in the country's urban areas rose 25.6 percent in the first five months of the year compared to a year earlier, supported the view that the country's appetite for raw materials will keep commodity prices stronger for longer.

"Markets are going to continue to be volatile but the basic fundamentals remain sound and we are going to get a reaction to any positive news out of China in terms of spending -- that has to be positive for resources stocks," said Michael Heffernan, a private client advisor at Reynolds & Co.

BHP Billiton ended up 0.9 percent at A$45.32 and Rio Tinto added 2.3 percent to A$140.15. Financial woes But banks largely remained under pressure after a downbeat report by Goldman Sachs on the broader banking industry. The report estimated credit losses from deterioration in the mortgage and lending markets will not peak until early 2009, and said U.S. banks will need to raise an additional $65 billion.

Westpac ended up 1.1 percent at A$22.00 and St. George added 1.4 percent to A$29.99. National Australia Bank fell 1.4 percent to A$27.59, Commonwealth Bank lost 1.6 percent to A$40.64 and ANZ fell 1.2 percent to A$22.00.

Manila's 30-company composite index closed down 0.3 percent at 2,628.20. Stabilising yen The Nikkei 225 Stock Average ended 0.7 percent higher at 14,452.82 as investors snapped up high-tech issues, including automobile battery maker GS Yuasa and NEC Electronics after the yen stabilised.

"In addition, overseas investors appear to rate the merits of the Japanese economy, such as its relative strength against inflation, and that the impact on it from the subprime mortgage mess was small," said Soichiro Monji, chief strategist at Daiwa SB Investments.

"They may also appreciate the change in attitude of Japanese shareholders to a more assertive one and that the policy of the administration of Prime Minister Yasuo Fukuda is seen as more reform-minded than had been anticipated," Monji said.

The Kuala Lumpur Composite Index finished the day's trade down 15.17 points or 1.2 percent at 1,212.59. as political concerns weighed.

The market faced uncertainty over the reign of Prime Minister Abdullah Ahmad Badawi after plans of a no-confidence vote against his leadership. Elsewhere, the Singapore Straits Times Index closed up 11.85 points or 0.4 percent at 3,040.09, while the Jakarta Composite closed 0.6 percent lower at 2,364.58.

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 steady near $885/oz on firmer dollar, inflation concerns

LONDON - Gold steadied near $885/oz on Wednesday as a firmer tone in the dollar offset continuing fears over rising inflation levels.

At 10:33 a.m., spot gold was trading at $884/oz against $885.25/oz in late New York trade on Tuesday. Gold surged to a one-week high on Monday of $894.53/oz as crude oil rallied to a record close to $140 a barrel, sparking higher inflation fears.

Gold has been well supported by concerns over rising inflation, as the precious metal is used as a hedge against the dangers of higher fuel and food costs.

However, gold prices have been capped on Wednesday by a stronger tone in the U.S. dollar and a dip in the price of crude oil.

The precious metal tends to trade counter to the dollar, as it serves as an alternative asset to the world's predominant reserve currency.

Standard Bank analyst Manqoba Madinane said that gold prices are likely to fluctuate ahead of the U.S. Federal Reserve's interest rate decision next week, as market players try to predict the outlook for the U.S. dollar.

Among other precious metals, platinum was trading up at $2,076/oz against $2,062/oz in late New York trades on Tuesday.

Sister metal palladium slipped to $455/oz from $459.75/oz, while silver was higher at $17.05/oz from $16.86/oz.

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