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Overnight Briefing

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U.S. stocks dropped

Fri, Oct 3 2008, 06:05 GMT
by Jyske Bank Team

Jyske Bank

• EURUSD at 13 month low

• Oil lower as USD rise

• Dollar poised for biggest weekly gain in 16 years

Today’s main events:

• EUR: Retail sales

• USD: Non-farm payrolls

• USD: ISM

American Time Zone:

U.S. stocks dropped

U.S. stocks dropped for a second day as a jump in borrowing costs and reports showing a worsening economy spurred concern that the government's USD 700 billion bank bailout plan won't be enough to stimulate growth.

Caterpillar Inc., Alcoa Inc. and Deere & Co. tumbled more than 8 percent as three-month bank lending rates climbed to the highest since January, while the government said factory orders declined more than forecast.

General Electric Co. lost 9.7 percent after selling USD 12.2 billion in shares at a discount. Monsanto Co. slid 16 percent, its steepest loss since going public in 2000, after Merrill Lynch & Co. said slumping demand will hurt farm companies. “If banks aren't willing to lend money to a bank, are they going to be willing to lend to an average person? No, they're not,'' said Frank Ingarra, money manager at Hennessy Advisors Inc., which oversees USD 1.1 billion in Novato, California. “We could be at the start of a pretty bad recession.”

EURUSD at 13 month low

The euro fell to a 13-month low against the dollar and the weakest in two years versus the yen after European Central Bank President Jean-Claude Trichet said policy makers discussed cutting interest rates.

Oil lower as USD rise

Crude oil fell more than USD 4 a barrel, as the dollar reached a one-year high against the euro and U.S. fuel demand dropped to the lowest since the last recession.

Far East Time Zone:

Nikkei down 1.4 percent on economy fears

Japan's Nikkei average fell 1.4 percent on Friday to hit its lowest point in more than three years on fears that the global economy will worsen even if the U.S. Congress passes a USD 700 billion bank rescue bill.

Automakers such as Toyota Motor continued their slide after major car companies reported a 26 percent drop in overall U.S. sales for September as the crisis on Wall Street rocked consumer confidence.

Dollar poised for biggest weekly gain in 16 years

The dollar hovered near a one-year peak against a basket of major currencies on Friday as banks and financial institutions have scrambled to buy the U.S. currency on the open market after being locked out of frozen money markets.

The dollar extended gains versus the euro scored the previous day after European Central Bank President Jean-Claude Trichet said inflation risks have eased, bolstering expectations the ECB will follow other major central banks in cutting rates.

So far on the week, the dollar has soared 4.2 percent against a basket of six major currencies, poised for its biggest weekly rise in 16 years.

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Published on  Fri, Oct 3 2008, 06:12 GMT