FTSE 100	4426.19, -22.35	Dow	8473.97, -125.21
FTSE 250	6685.99, +32.11	Nasdaq	1538.79, -32.8
FTSE All Share	2218.93, -8.63	S&P 500	870.26, -20.09
Nikkei	8413.91, -422.89	Hang Seng	13668.05, -302.95
Oil (Crude)	$37.59	Gold	$821
Base Rate	1.5%	10 Yr Gilt	3.15%
£/$	1.469	£/€	1.1086
1 month LIBOR	1.724	3 month LIBOR	2.328

 

Markets

London - The FTSE 100 is currently 51.17 points lower at 4,375.02. Rio Tinto leads the decline, down 6.3%, after saying it will delay work on a $371 million program to automate iron ore trains in Western Australia and suspended a copper mine expansion because of the global recession. Xstrata is 5.7% lower after announcing it will shutter its Handlebar Hill zinc and lead mine in Australia. Tesco tops the risers’ board, up 2.7%, after saying revenue growth accelerated over the Christmas period.

New York - US stocks declined yesterday, led by the financial sector, following a report in the Wall Street Journal about Citigroup. Elsewhere the start of the fourth quarter earnings reporting period added to the dismal mood, with disappointing results expected. The Dow Jones fell 125.21 points to close at 8,473.97, the S&P 500 dropped 20.09 points to end at 870.26. The Nasdaq lost 32.80 points to finish at 1,538.79.

It was reported that Citigroup could suffer a $10 billion operating loss in its final quarter. Furthermore, the investment bank is in talks to sell a controlling stake in its Smith Barney brokerage unit to Morgan Stanley. Investors did not look favourably on news that Citi is so desperate for cash it is willing to sell one of its best assets and sent the stock 17% lower. Elsewhere, Bank of America sank 12% while JPMorgan was off 4.1%.

In deal news, Advanced Medical Optics soared 143% after Abbott Laboratories bought the company for nearly $1.4 billion. Abbott shares slipped 2.2% as a result.

After the session had ended Alcoa began the season reporting a bigger than expected loss of 28 cents a share. Shares had already closed 7% lower after Deutsche Bank had put a sell recommendation on the stock. Shares edged a further 1.1% down in extended trade.
US light crude oil for February delivery slid $3.24 to settle at $37.59 a barrel. COMEX gold for February delivery dropped $34 to close at $821 an ounce. Treasury prices jumped, lowering the yield on the 10 year note to 2.3% from 2.4%.

Tokyo - The Nikkei slumped 422.89 points to close at 8,413.91 this morning. Media reports suggested that Sony Corp and Toshiba Corp will post losses stoking concerns that other companies will have disappointing earnings. Mitsubishi Estate sank 9.2% after more real estate companies filed for bankruptcy.

Hong Kong - The Hang Seng lost 302.95 points to end at 13,668.05 this morning. Aluminium Corp led materials companies lower after Alcoa reported its disappointing quarterly figures.

Economics

UK RICS house prices balance (Dec) 00.01 gmt

The latest BoE Credit Conditions Survey continues to tell a story of credit tightening. Survey results suggest household secured lending spreads increased greatly in the last quarter of 2008, demonstrating the unwillingness of lending institutions to pass on rate cuts in full. Mortgage approvals were a meagre 27,000 in November.

Still, this series reflects the prevalence of price rises and falls across the UK, and some of the regions have seen less dramatic falls than others. The series has stabilised over the last few months and we expect it to have edged up slightly further in December.

UK DCLG house prices (Nov) 09.30 gmt

The DCLG house price index is the last of the house price indices to be released so tends not to be as significant for the markets as the Nationwide or Halifax release. House prices on this measure are holding up significantly better than implied by the other indicators. This is because this index is value weighted and so is more heavily influenced by sales in London and of larger properties for which the price declines so far have as yet been minimal.

UK Trade balance (Nov) 09.30 gmt

Sterling has depreciated significantly on a broad based measure, and particularly against the euro. The hope is that higher export demand and import substitution will stimulate demand, but in an environment of collapsing world trade growth, exports are unlikely to be supported near term. The trade deficit has narrowed in recent months and a modest further improvement in November is expected as imports fall more sharply than exports.

US Trade balance (Nov) 13.30 gmt

The trade deficit in November probably narrowed to -USD53bn, from -USD57.2bn in October. Total imports are expected to have fallen by nearly USD11bn, primarily reflecting lower oil prices (petroleum import price fell 26 percent). Exports could fall by about 4bn. Export prices on goods declined 3.2 percent, and also expect falling volumes for the third straight month. The ISM export orders index has dropped sharply in recent months, to 41 in both October and November and down to 35.5 in December.

US IBD/TIPP economic optimism (Jan) 15.00 gmt

This confidence index has held up better than either the Conference Board or University of Michigan surveys. Even after falling 6 points to 45 in December, the series is still 8 points above the record low set in June last year, when gasoline prices were at their peak. With gasoline holding about steady in recent weeks, the January IBD/TIPP reading is expected to remain at 45. Excluding the federal policies components, a small rise to 50 is expected from 49.5.

US Monthly budget statement (Dec) 19.00 gmt

A budget deficit of -USD50bn in December 2008 is expected, compared with a surplus of USD48.3bn in December 2007. Additional TARP capital injections in December totalled around USD26bn.

Corporate

Global miner Rio Tinto has shelved a $229 million plan to extend its Northparkes copper mine in Australia, the firm said on Tuesday, as it slashes capital spending and seeks to rein in nearly $40 billion of debt. The world’s fourth-biggest miner by market value took the decision in response to weaker copper prices, which have plunged about 60 percent since July as demand for the metal in building and electronics products has evaporated. The project aimed to extend the mine’s life to at least 2016. In the nine months to Sept. 30, Northparkes produced 13,800 tonnes of copper and 20,000 ounces of gold. Rio Tinto said 26 Northparkes staff would lose their jobs and a further 320 contractors would be laid off. As well, the group has delayed its $371 million plan to automate train operations on a rail network that services its iron ore mines in western Australia’s Pilbara region. It blamed slowing demand for iron ore as global economic growth stalls.

Tesco Plc reported the smallest rise in Christmas sales at UK stores open at least a year since the early 1990s, as Britain’s biggest retailer felt the impact of the economic downturn. However the supermarket chain, which takes about one in every eight pounds spent in British shops, said on Tuesday it was growing market share across a range of non-food items, including electricals, clothing and entertainment as shoppers’ desert specialist retailers in search of the cheapest prices. Sales at British stores open for at least a year, excluding fuel, rose 2.5% in the seven weeks to January 10th. That was an acceleration from the 2% growth reported for the 13 weeks to November 22nd, and just above an average forecast of 2.4%. Estimates ranged from 1.7% to 3.0%. Dealers said the shares are expected to rise by as much as 2.2% at the opening. Group sales were up 11.6%, boosted by 32.7% growth in international sales. Tesco employs 440,000 people in about 4,000 stores across 14 countries. Tesco said adjusting for the reduction in VAT sales tax, which came into effect in early December, growth on a comparable basis was 3.5 percent. Britain’s retailers are struggling as shoppers curb spending amid rising unemployment, sliding house prices and fears of a deep recession. 

Britain’s financial watchdog said it is to cut the time investors have to sign up to a rights issue to reduce fundraising risk and allow firms to raise cash in less than half the time it currently takes. The plan, coupled with recent changes to guidelines for investors, should shorten the rights issue period to 16 days, compared with the 39 days at present. The Financial Services Authority (FSA) on Monday proposed to cut the minimum subscription period for a rights issue to either 14 calendar days, or 10 business days, from 21 calendar days. The shortened timeframe would allow companies to raise capital quickly when they need it most, said Sally Dewar, the FSA’s managing director of wholesale and institutional markets.

The above details are provided for information only and are not intended to be construed a solicitation for the sale or purchase of any particular investment nor as specific investment advice.

 

 

Posted: January 13th, 2009 under Asset Management.
Comments: none

 Print this post