FTSE 100	4295.2, +100.79	Dow	8375.45, +200.72
FTSE 250	6423.76, +165.19	Nasdaq	1558.34, +53.44
FTSE All Share	2149.68	S&P 500	874.09, +28.38
Nikkei	8251.24, +144.95	Hang Seng	13154.43, +575.83
Oil (Crude)	$42.16	Gold	$890
Base Rate	1.5%	10 Yr Gilt	3.67%
£/$	1.413	£/€	1.0811
1 month LIBOR	1.589	3 month LIBOR	2.170

 

Markets

London - The FTSE 100 is currently 50.88 points lower at 4,244.32. Xstrata leads mining companies and the market lower, losing almost 14% of its value after announcing plans to raise $5.9 billion through a heavily discounted two-for-one rights issue. Rio Tinto drops 7% while Kazakhmys slides 6.3%. Shares in Smith & Nephew rise 2.1 percent, putting them among the top gainers, after Goldman Sachs upgrades the medical device company to "buy" from "neutral" and adds it to its "conviction buy" list.

New York - US stocks rallied yesterday after financial stocks were boosted by reports that the Obama administration and the Federal Reserve were taking steps to relieve banks of money losing assets. It is thought that the Treasury Department will create a "bad bank" to buy up assets whose worth had plummeted in the hopes this will revive lending to consumers and businesses. As expected, the central bank also kept the fed fund rate in a range between 0% and 0.25% and indicated that it would remain there for the foreseeable future.

The Dow Jones jumped 200.72 points to close at 8,375.45, the S&P 500 added 28.38 points to end at 874.09. The Nasdaq climbed 53.44 points to finish at 1,558.34.

Gains were broad across the financial sector with the S&P financial index rallying 13%. Stand out risers include JPMorgan, up 10.4%, Bank of America which rose almost 14% and Citigroup which jumped over 18%. Wells Fargo surged 31% higher after reporting a $2.6 billion quarterly loss, suffering partly due to its purchase of Wachovia last year. However, excluding charges the bank earned 41 cents a share, topping estimates of 33 cents. Wells also maintained its dividend and stated it had no intention of asking the Treasury for more bailout money on top of the $25 billion it accepted last year.

In the tech sector, Yahoo jumped 8% following its quarterly results, announced late Tuesday, that beat analysts expectations. Elsewhere, IBM climbed 3.5%, topping the Dow and Apple Inc rose 3.8%.

After the bell it was a different story, coffee chain Starbucks fell 2% after it fell short of profit estimates. Qualcomm Inc slipped 2.6% after cutting its 2009 revenue outlook. Home and auto insurer Allstate Corp plummeted 11% after reporting a $1.1 billion quarterly loss.

US light crude oil for March delivery added $0.58 to settle at $42.16 a barrel. COMEX gold for April delivery slipped $11.40 to $890 an ounce. Treasury prices slumped, raising the yield on the 10 year note to 2.66% from 2.52%.

Tokyo - The Nikkei rose 144.95 points to close at 8,251.24 this morning on expectations that central bank efforts to unlock credit markets will ease the global financial crisis. Sumitomo Mitsui Financial Group soared 13% even after bad loan costs smashed its third quarter profit.

Hong Kong - The Hang Seng rallied 575.83 points higher to 13,154.43 this morning in the first day of trade this week following the New Year holiday. HSBC surged 9%, making it the top performer on the index, on speculation that Federal Reserve’s continued rescue plan will calm the turmoil in global financial markets.

Economics

US Durable goods orders (Dec) 13.30 gmt

We know that manufacturing demand remained very weak in December as ISM new orders fell to 22.7, the all time low going back to 1948. The Beige Book also noted that manufacturing declines were noted in a wide range of industries, with few exceptions. There were reports of slowing demand for semiconductors and other IT products, metals, and wood products. Boeing aircraft orders rose from 7 in November up to 23 in December, which should help reduce the overall drop in transportation orders. Total durable goods orders are expected to fall 1.9 percent, with ex-transportation orders down 2.3 percent.

US Initial jobless claims (week Jan 24) 13.30 gmt

Initial jobless claims jumped to 589,000 last week, matching the highest level in 26 years. The 4 week average was steady at 519,250. Claims for the previous week are could rise to a new cycle high 4.7m, up from 4.61m.

US New home sales (Dec) 15.00 gmt

Home buying conditions have risen to their post bubble high according to the latest University of Michigan survey, as consumers cite low prices. This is the one bright spot for housing, while selling conditions and homebuilder optimism remain extraordinarily depressed. With the stock of distressed of foreclosure homes for sale continuing to compete with new home inventory, new home sales may remain under pressure. A small fall to 400,000 in December is expected.

Corporate

Xstrata Plc, whose shares have been hit by worries about its debt, said it plans to raise about $5.9 billion through a heavily-discounted two-for-one rights issue of new stock. Xstrata, the world’s fifth-biggest diversified mining group by market value, said in a statement on Thursday it would issue 1.96 billion new shares at £2.10 a share. The issue price represents a discount of 66% to the Xstrata’s closing price of £6.23 on Wednesday. The rights issue is fully underwritten by investment banks Deutsche Bank and JP Morgan. Following the fund raising, its net debt would fall to around $12.6 billion, with gearing less than 30%, it added. The group said it was also taking other measures in the face of the global downturn, including improved working capital management, which released about $1 billion in cash in the second half of last year, and cutting capital spending by $3 billion for 2009.

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 29th, 2009 under Asset Management.
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