FTSE 100	5355.5, +104.14	Dow	10450.95, +132.79
FTSE 250	9270.11, +102.51	Nasdaq	2176.01, +29.97
FTSE All Share	2735.06, +49.76	S&P 500	1106.24, +14.86
Nikkei	9401.58, -96.10	Hang Seng	22423.14, +348.25
Oil (Crude)	$77.56	Gold	$1164.70
Base Rate	0.5%	10 Yr Gilt	3.65%
£/$	1.652	£/€	1.1086
1 month LIBOR	0.515	3 month LIBOR	0.613

 

Markets

London - The FTSE 100 rallied 104.14 points to close at 5,355.5 yesterday. Commodity related shares led the market higher on the back of a weaker dollar. Fresnillo and Kazakhmys were both finished 4.3% higher. The day’s biggest riser in London was Royal Bank of Scotland, which finished up 5%. This morning the index is 34.40 points lower at 5,321.10. Heavily weighted miners retreat in line with metal prices, Vedanta Resources slides 2%. Lloyds tops the risers’ board after pricing its rights issue at 37 pence a share.

New York - US indices jumped yesterday following a strong read on the housing market and a rally in commodities. The Dow Jones jumped 132.79 points to 10,450.95, the S&P 500 climbed 14.86 points to 1,106.24 and the Nasdaq gained 29.97 points to 2,176.01. A sliding dollar helped push gold to another record, hitting an intra-day high of $1,174. Housing related shares were lifted by a report from the National Association of Realtors that said existing home sales surged to their highest level since February 2007. Sales rose 10.1% in October, from 5.54 million to 6.1 million - economists had forecast a rise to just 5.7 million.  

Tokyo - The Nikkei fell 96.10 points to close at 9,401.58 this morning. Losses were broad based after the government said the economy is in deflation for the first time in three years. Banking stocks were among the biggest losers after the Nikkei newspaper said banks are preparing a new round of share sales.

Hong Kong - The Hang Seng is currently 348.25 points lower at 22,423.14. Banks are lower as investors continue to worry that China will raise its capital adequacy requirements. Although China’s banking regulator subsequently denied that it has told large banks to do so.

Economics

UK BBA loans for house purchase (Oct) 09.30 gmt

The BBA data accounts for roughly 75 percent of the total UK mortgage issuance, so provides a useful indicator of the BoE data released a week later. A sizeable jump in mortgage approvals in October is expected.

US GDP (Q3, second release ) 13.30 gmt

Q3 GDP is expected to be revised lower to 2.9 percent from the first estimate of 3.5 percent, reflecting a downward revision to consumption growth, a smaller inventory contribution, and a bigger drag from net exports.

US S&P/Case-Shiller home prices (Sept, Q3) 14.00 GMT

Radar Logic house prices started to fall in mid August, after climbing steadily for most of this year. As a result the 20 year city Case-Shiller index could be flat in September, after rising for the previous three months. The year on year rate would rose to -9.7 percent from -11.3 percent in August. Meanwhile Q3 data for the national Case-Shiller index could show the year on year rate improving to -11.4 percent, up from -14.9 percent Q2.

US FHFA house price index (Sept Q3) 15.00 GMT

The FHFA/house price index fell 0.3 percent in August, and a small rise of 0.1 percent is expected (after seasonal adjustment) in September. The year on year rate is expected to improve to -2.7 percent from -3.8 percent in August. This should also mean a quarter on quarter increase of about 0.5 percent in Q3, after a 0.7 percent decline in Q2.

US Consumer confidence (Nov 15.00 gmt)

Consumer confidence was weaker than expected for the past two months, including a 5.7 points decline to 47.7 in October. The preliminary University of Michigan reading for November was also soft, falling 4.6 points to 66. However, the weekly ABC News survey has improved for the past three weeks, stocks prices have risen, and gasoline prices have edged lower.

The strength of recent ISM reading suggests that the business conditions components should show improvement rather than softening as they did in the October survey. Although further deterioration in the job series cannot be ruled out, the Jobs Plentiful index is already near rock bottom levels at just 3.4. While the Jobs Hard to Get index (49.6) has been zigzagging between 44 and 50 for most of this year. November consumer confidence is expected to be unchanged at 47.5.

US FOMC minutes (3-4 Nov meeting) 19.00 gmt

The FOMC is likely to revise up its 2009 and 2010 growth estimates, relative to the forecasts made at the 23-24 June meeting, following the initial reading of 3.5% for Q3 GDP. The forecast for Q4/Q4 2009 could be raised by 1ppt to a range of -0.5% to 0.0%, while 2010 could edge higher at 2.3% to 3.5%. Both 2011 and 2012 (released for the first time) GDP growth should be forecast well above trend, required to justify the outlook for lower unemployment.
At the same time, a wider band of unemployment estimates is expected, with end-2009 at a range of 9.8% to 10.3%, end-2010 at 9.4% to 10.0%, end-2011 at 8.2% to 9.0% and end-2012 at 7.0% to 7.8%. Even at end-2012, these will be well above the FOMC’s longer-run unemployment forecast of 4.8% to 5.0%, its unofficial estimate of NAIRU. Inflation projections could be tweaked a bit, with end-2010 core PCE inflation revised lower to 0.8% to 1.5%.

Corporate

Lloyds Banking Group Tuesday priced the largest-ever rights issue at 37 pence a share, a 60% discount from Monday’s closing price. The U.K. bank will offer 1.34 rights share for every existing one in an effort to raise GBP13.5 billion, it said in a statement. The rights offer is part of a plan announced last month to raise GBP22.5 billion in fresh capital, including through the conversion of debt, as the bank tries to avoid an expensive insurance scheme that would otherwise see the government increasing its stake in Lloyds to over 60% from 43% currently. The bank has already raised GBP8.5 billion from a debt-conversion offer. The rights issue price was at a 38.6% discount to the theoretical ex-rights price, the bottom of the 38% to 42% range previously given. The offer, which will represent 57% of Lloyds’ share capital once completed, is subject to shareholders approval Thursday in Birmingham. The U.K. government said it will take up its part in the issue, which is also fully underwritten.

Severn Trent today swung to a net profit in the six months to the end of September, recovering from a loss in the same period last year, due to higher water prices, cost cuts and gains on interest rates. The U.K. water company reported a profit of GBP149.7 million for the first six months of the year, compared to a loss of GBP83.8 million for the year-earlier period. Revenue increased 4.6% to GBP852.1 million from GBP814.3 million the previous year. The company said that operational results for the remainder of the year will depend on a number of factors relating to business performance, "including achieving an acceptable final determination from (U.K. water regulator) Ofwat". Ofwat will Thursday give its final ruling on how much more water companies can charge household customers over the next five years. Companies will have to decide whether to accept the price limits Ofwat sets, or to seek referral to the Competition Commission. The new price limits will come into effect on 1 April 2010.

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

 

Posted: November 24th, 2009 under Asset Management.
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