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Overnight Briefing

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US Stocks decline – Credit fears

Tue, Aug 19 2008, 05:58 GMT
by Jyske Bank Team

Jyske Bank

• USD lower

• Nikkei decline – hit 1 month low

• BOJ keeps rates steady

Today’s main events:

• DE - ZEW Sentiment

• US – Producer prices

• US – Housing starts

American Time Zone:

U.S Stocks decline

U.S. stocks declined the most in more than a week, led by banking and real estate shares, as growing speculation the government will bail out Fannie Mae and Freddie Mac rattled the mortgage market. Freddie Mac and Fannie Mae slumped to the lowest in almost two decades, losing more than 18 percent, after Barron's said shareholders of the biggest U.S. home-loan financiers would be wiped out in a Treasury rescue. Lennar Corp. and Ryland Group Inc. led a 5.1 percent drop by builders.
Hershey Co. retreated the most since 2002 after the chocolate maker said price increases will curb growth. The market extended its decline after oil pared a loss of as much as 1.6 percent. About 607 million shares traded on the New York Stock Exchange, 25 percent fewer than at the same time a week ago.

USD lower

The dollar fell from the highest level in almost six months against the euro and dropped versus currencies in New Zealand and Australia on speculation its recent rally is too fast to be sustained.
The U.S. currency decreased against the yen as concern the government will be forced to bail out Fannie Mae and Freddie Mac led some investors to sell higher-yielding assets and pay back loans in Japan's currency.

Oil declined
Crude oil fell amid signs Tropical Storm Fay will miss rigs and platforms in the Gulf of Mexico, which accounts for about a fifth of U.S. production.

Far East Time Zone:

Lower stocks on credit fears

MSCI pan-Asia index at lowest since July 2006 with a fall of 1.7 percent on Tuesday, led by exporter shares, on fears of further destabilising in the financial sector.
Nikkei was down 2.65 percent to a one-month low.

AUD sees case for early rate cut

Australia’s central bank could see a case for an early rate reduction to head off a deeper slowdown in the economy. – Even if inflation remained high, the minutes from its August meeting showed on Tuesday.

The RBA left key rates steady at a 12-year high of 7.25 percent at its meeting on August 5, but signalled that the next move was likely to be lower.

Gold slips below $800 again

Gold fell to $792.50 an ounce from $801.05 late in New York on Monday, when it regained $800 in a technical rebound, after falling to its lowest level in nine months around $773 an ounce last week. Gold hit a lifetime high of $1,030.80 in March.

BOJ keeps rates steady

BOJ kept its rate target unchanged at 0.50 percent as widely expected, and cut its economic outlook.

In a statement BOJ said, that economic growth had been sluggish due to weaker growth in exports and high energy and raw material prices.

USDJPY was unchanged at 109.80 after the announcements.

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Published on  Tue, Aug 19 2008, 06:05 GMT