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Overnight Briefing

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Stocks tumble

Thu, Sep 18 2008, 05:35 GMT
by Jyske Bank Team

Jyske Bank

• Oil and gold higher

• U.S. Dollar declined

• Japan business mood stays gloomy – Reuters Tankan

Today’s main events:

• GBP Retail Sales

• USD Initial Claims

• USD Philly Fed

American Time Zone:

Stocks tumble Wall Street plunged again in a crisis of confidence Wednesday as anxieties about the financial system still ran high after the government's bailout of insurer American International Group Inc. The Dow Jones industrial average dropped about 450 points, and investors seeking the safety of hard assets and government debt sent gold, oil and short-term Treasurys soaring.

USD declined

The dollar weakened against the yen as the USD85 billion bailout of American International Group Inc. failed to boost confidence in credit markets.
Japan's currency gained versus the high yielders on speculation investors will reduce holdings of higher-yielding assets and pay back low-cost loans in Japan. The dollar fell versus the euro as gold surged 11% to USD 866, the most in nine years, and oil prices rebounded.

Oil and gold higher

Crude oil rose more than USD 5 a barrel as investors sought the safety of the commodity on concern that the credit crisis will deepen, leading more financial institutions to fail.
Oil climbed and gold surged as Goldman Sachs Group Inc. and Morgan Stanley plunged the most ever. Prices also advanced after a U.S. government report today showed that crude oil stockpiles dropped the most since May because of disruptions from Hurricane Ike.

Far East Time Zone:

Raw fear slams Asian stocks, 'safe' gold rises

Asian stocks tumbled 3-4 % on Thursday, with emergency actions by central banks and governments around the world failing to ease a financial crisis that has sent investors fleeing to gold and government bonds.
Overnight, No. 2 U.S. investment bank Morgan Stanley and top U.S. savings and loan Washington Mutual were reportedly up for sale, and a source familiar with the matter said Britain's Lloyds TSB agreed to buy rival HBOS reflecting the unstable landscape that has contributed to gold's 18 % surge in the last week.

"Credit fears have now reached a climax. It's presumptuous to assume it would end in one day," said Harushige Kobayashi, head of research department at broker Securities Japan. "The market ignores fundamentals and is now 95 % driven by psychological factors."

Japan's Nikkei share average fell 3 % to a three-year low early on Thursday. Gold prices in the spot market rose 2.5 % to a 1-monthhigh, as frenzied investors sought relatively safe assets.

Japan business mood stays gloomy- Reuters Tankan

Business confidence among Japanese manufacturers remained negative for the fifth month in a row in September and nonmanufacturers' sentiment sank to a nearly five-year low, a Reuters poll showed on Thursday, reflecting widespread gloom as the economy heads into recession.

Economists expect the business mood to sour further as U.S. government efforts to prevent a financial meltdown have failed to stop a slide in global stock markets that dragged Japan's Nikkei average down 3 % on Thursday.
The weak readings mean the BOJ's September tankan survey, due out on Oct. 1, will likely show a worsening of business sentiment from three months before, underscoring views that the central bank will keep interest rates unchanged at 0.5 % until late next year.

Japan, Australia inject funds into money markets

Japan and Australia pumped further USD 17 billion into money markets on Thursday to prevent banks from hoarding cash amid a global crisis of confidence sparked by this week's dramatic Wall Street shake-up.
Overnight, news emerged of takeovers involving No. 2 U.S. investment bank Morgan Stanley, top U.S. savings and loan Washington Mutual and major UK mortgage lender HBOS, reflecting the seismic change in the global financial landscape.

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Published on  Thu, Sep 18 2008, 06:50 GMT