• Home ::
• Fundamental ::
• Analysis Reports ::
• Overnight Briefing

• Send
• Print
• Add To
• Rss

Overnight Briefing

3b9fadd4-dd04-4f97-95bb-b9186728e1df

0

0

U.S. stocks advanced

Mon, Sep 8 2008, 05:40 GMT
by Jyske Bank Team

Jyske Bank

• U.S. seizes Fannie & Freddie

• The dollar weaker versus euro and up versus yen

• Asian stocks soar on Fannie, Freddie bailout

Today’s main events:

• GBP Producer Price Index

• EUR ECB’s Stark speaks

• USD FED’s Fisher speaks

American Time Zone:

U.S. stocks advanced

U.S. stocks rose as speculation Lehman Brothers Holdings Inc. will raise money through asset sales helped pare losses in the worst week for global equities in six years.
Lehman rallied 7.2 % on a Reuters report the securities firm may sell assets to boost capital. Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. climbed more than 3 % as banks also benefited from growing expectations the Federal Reserve will hold off raising interest rates. Bank gains overpowered earlier declines of more than 1 % in the Standard & Poor's 500 Index and Dow Jones Industrial Average following a jump in the unemployment rate to a five-year high.

JPY rose and USD fell after US employment report

The yen was headed for its biggest weekly gain against the dollar since May and touched a one-year high versus the euro after the U.S. lost jobs for an eighth month and investors sold higher-yielding assets funded in Japan.

Oil at 5 month low

Crude oil fell to a five-month low of USD 105.13 as the dollar gained, curbing demand for commodities as a hedge, and a government report showed employers in the U.S. cut more jobs last month than forecast, a signal that demand may drop.

Far East Time Zone:

U.S. seizes Fannie & Freddie

The U.S. government on Sunday seized control of mortgage finance companies Fannie Mae and Freddie Mac, launching what could be its biggest bailout ever in a bid to support the U.S. housing market and ward off more global financial market turbulence.

The action, prompted by worries over the companies' shrinking capital, was the latest in a series of emergency steps taken by U.S. officials to prop up the ailing housing market and quell what is now a year-long crisis in credit markets that has helped push many economies toward recession.

"Our economy and our markets will not recover until the bulk of this housing correction is behind us," U.S. Treasury Secretary Henry Paulson said in a statement read to reporters.

Fannie Mae and Freddie Mac, which own or guarantee almost half of the country's USD 12 trillion in outstanding home mortgage debt, were so large that "a failure of either of them would cause great turmoil in our financial markets here at home and around the globe," Paulson said.

The dollar weaker versus euro and up versus yen

The dollar fell against the euro but climbed on a sliding yen on Monday after the U.S. government seized control of mortgage companies Fannie Mae and Freddie Mac to shore up the U.S. housing market and protect against more global financial turbulence.

The Japanese currency was the major loser as the move seemed to lessen one major risk to global financial markets and the U.S. economy, reversing last weeks' broad surge on a flight to safety.

The yen had shot higher last week as growing risk aversion led investors to cut back leveraged carry trades funded in the Japanese currency.

Now some of that process is reversing, knocking the yen broadly lower while boosting the euro and commodity currencies like the Australian dollar.

The euro jumped to 155.35 yen, up 1 % from late in New York on Friday and shot as high as 156.93 yen on trading platform EBS in early Asian trade.

Against the dollar, the euro rose 0.5 % to USD 1.4334, off an 11-month low of USD 1.4197 touched last week.

The dollar climbed 0.7 % to 108.55 yen and touched as high as 109.05 on EBS, while the Australian dollar jumped more than 2 % to 89.69 yen, sharply above a two-year low of 84.98 yen hit last week.

The dollar index, which tracks the value of the greenback against a basket of six currencies, was up slightly at 78.573

Asian stocks soar on Fannie, Freddie bailout

Asian stocks surged 4 % and government bonds tumbled on Monday after Washington took over Fannie Mae and Freddie Mac to save the U.S. housing market and limit the extensive damage of the financial crisis.
Investors, who have been keeping their portfolios heavy with cash, devoured bank shares and ploughed into most Asia-Pacific currencies as the rescue of the top mortgage finance companies, possibly the biggest U.S. government bailout ever, helped willingness to take risks.

Still, the impact of the rescue package on the U.S. government's fiscal position could ultimately hurt the U.S. dollar, some analysts said, a prospect that helped to send Treasury yields higher.

Japan's Nikkei share average rose 3.6 %, bouncing from a 5-1/2-month low on Friday. Stocks of large banks such as Mitsubishi UFJ Financial Group and Mizuho Financial Group rallied 12.3 % and 11.4 %, respectively.

• Download Full Overnight Briefing

Published on  Mon, Sep 8 2008, 05:54 GMT