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Overnight Briefing

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U.S. Stocks slide on credit fears

Wed, Aug 20 2008, 05:53 GMT
by Jyske Bank Team

Jyske Bank

• USD declined – Oil rose

• Asian stocks hit a two-year low

Today’s main events:

• US MBA Mortgage applications

• GB Minutes of BoE meeting

American Time Zone:

U.S. Stocks Retreat

U.S. stocks declined and the Standard & Poor's 500 Index posted its steepest twoday slump since June after wholesale prices rose faster than economists estimated, housing starts fell and concern grew that the nation's biggest financial firms will report more losses. American International Group Inc., the largest insurer, and Lehman Brothers Holdings Inc., the biggest mortgage-bond underwriter, retreated more than 4.5 percent as analysts warned of added write downs from bad real-estate loans. Centex Corp. and Pulte Homes Inc. sent homebuilders to a three-week low as construction began on the fewest houses in 17 years. Staples Inc. decreased the most in 1 1/2 months and Saks Inc. dropped as much as 14 percent after saying results will miss forecasts.

USD declined

The dollar dropped from a six-month high against the euro as stocks fell and crude oil prices rose, raising concern the U.S. economic slowdown will be prolonged.
The yen advanced for a second day versus the dollar on speculation credit market losses at financial firms including Lehman Brothers Holdings Inc. will deepen, reducing demand for higher-yielding assets funded by loans in Japan. The dollar also weakened against the euro on speculation its 6 percent rally this month is too fast to be sustained.

Oil rose as USD weakened

Crude oil rose more than USD 1 a barrel to USD 114.40 as a weakening dollar prompted investors to purchase commodities as an inflation hedge.

Far East Time Zone:

Nikkei dips to a one-month low

Japan’s Nikkei fell 0.3 percent to a one-month low with bank shares such as Mitsubishi UFJ Financial Group was hit by worries about the U.S. financial system.

Asian stocks fell to a two-year low

Asian stocks are down 30 percent from a peak hit in November on fear about sharply slowing global growth and worries about the financial system.

Most Asian stock markets edged higher, rebounding as Chinese shares surged on hopes for policies from Beijing to jumpstart growth.

AUD supported by higher commodities

The Australian dollar retained gains above 87 USD, supported by higher commodities price and by a weaker USD.

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Published on  Wed, Aug 20 2008, 05:58 GMT