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Overnight Briefing

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U.S. equities fell

Mon, Sep 1 2008, 05:59 GMT
by Jyske Bank Team

Jyske Bank

• Yen appreciated

• Economy at 60-year low, says Darling

• Sterling at record low versus euro

• Oil price rose on hurricane fear

Today’s main events:

• SEK PMI Survey

• DEM Retail Sales & PMI Manufacturing

• GBP Mortgage Approvals & PMI Manufacturing

• USD FED’s Hoenig speaks

American Time Zone:

U.S. equities fell

U.S. stocks fell, paring the biggest monthly gain since April, as consumer spending slumped and lower-than-estimated earnings from Dell Inc. dragged down technology companies.

Starbucks Corp. and Amazon.com Inc. each lost more than 2 % in Nasdaq Stock Market trading after the government said growth in spending slowed to 0.2 % in July as incomes declined 0.7 %. Dell, the second-biggest personal-computer maker, had the biggest drop since November.
Constellation Energy Group Inc. helped drive all 31 utility companies in the Standard & Poor's 500 Index lower after Jefferies Group Inc. said the largest U.S. power marketer may have to sell more shares.

JPY appreciated

The dollar declined against the yen as government reports showed consumer spending slowed and personal income dropped in July.
The greenback was headed for its biggest monthly advance against the euro since the European currency began trading in 1999 and its longest gain versus the yen since 2002. The yen appreciated against all of the other major currencies after Japan's government announced plans to spend about 2 trillion yen to revive the world's second-largest economy.

Oil slightly lower

U.S. crude oil futures for October delivery settled at USD 115.46 barrel, down 13 cents after flirting with USD 119 a barrel earlier in the day.

Far East Time Zone:

Economy at 60-year low, says Darling

Britain is facing "arguably the worst" economic downturn in 60 years which will be "more profound and long-lasting" than people had expected, Alistair Darling, the chancellor, told the Guardian Saturday.

In the government's gravest assessment of the economy, which follows a warning from a Bank of England policymaker that 2 million people could be out of work by Christmas, Darling admits he had no idea how serious the credit crunch would become.

GBP/USD traded between 1.8015 and 1.8200.

Sterling at record low versus euro

Sterling fell versus the dollar to its lowest level in more than two years and slid to a record low against the euro on Monday, after comments by Britain's finance minister highlighted the UK economy's weakness.

Britain's economic downturn might turn out to be the worst for 60 years, Chancellor of the Exchequer Alistair Darling told the Guardian newspaper on Saturday.

Sterling gapped lower on technical charts due to Darling's comments, said a trader for a European bank, adding that market expectations for a Bank of England rate cut later this year were weighing on the currency.

The euro jumped to 81.39 pence on the Reuters dealing system, it’s highest since the single European currency was launched in 1999.

EUR/GBP traded between 0.8065 and 0.8139.

Australia current account deficit at AUD 12.77 billion

Australia's current account deficit narrowed sharply in the second quarter, courtesy of a jump in the value of resource exports, but trade still proved a slight drag on economic growth in the quarter. The same surge in resource prices helped boost company profits beyond all expectations as the mining sector boomed, adding to national income. Firms added to inventories at a slower pace.

Oil price rose on hurricane fear

Oil rose nearly USD 2 to over USD 117 on Monday as U.S. energy companies raced to shut down offshore oil production and flood-prone refineries in the Gulf Coast ahead of Hurricane Gustav, which is evoking memories of 2005's devastating Hurricane Katrina.

Forecasters predicted Gustav would be a major Category 3 hurricane by Monday morning local time, with top winds at around 200 kph (125 mph) when it slams into the Louisiana coast, west of New Orleans.

Over 96 % of U.S. Gulf oil production and 82 % of natural gas output had been closed as of Sunday afternoon, the U.S. Minerals Management Service said. The Gulf normally pumps a quarter of all U.S. production and about 15 % of its domestic natural gas output.

U.S. light crude for October delivery rose USD 1.75 to USD 117.21 a barrel by 0016 GMT, after trading as high as USD 118.60 after the electronic market was opened.

Commerzbank to buy Dresdner, axe 9,000 jobs

Commerzbank agreed to buy Dresdner Bank from Allianz on Sunday in a USD 14.5 billion all- German deal that will break the country's banking mould and cost 9,000 jobs.

Commerzbank will buy its competitor in two steps, taking 60 % this year and the rest in 2009 to create a rival to sector leader Deutsche Bank in Europe's biggest economy.

Much of the purchase price will be paid to Allianz in the form of shares, leaving Europe's biggest insurer with a stake of almost 30 % in the new Commerzbank.

The new owner plans to close more than a third of the combined group's 1,900 branches and pare back laggard investment bank Dresdner Kleinwort, which has been further hobbled by the credit crunch.

The deal puts a price tag of 9.8 billion euro on Dresdner. Allianz paid 24 billion for it in 2001.

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Published on  Mon, Sep 1 2008, 06:09 GMT