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

• Send
• Print
• Add To
• Rss

Overnight Briefing

67078f36-a3ee-4252-971d-b76d50b74308

2

0

U.S. stocks fell for an eight straight day

Mon, Oct 13 2008, 05:47 GMT
by Jyske Bank Team

Jyske Bank

• Euro zone agrees to an emergency rescue plan

• Australia & New Zealand guarantees bank deposits

• British banks set for 40 billion GBP rescue

• Oil rises over USD 3 to top USD 80 a barrel

Today’s main events:

• FRF Current Account

• GBP Producer Price Index

American Time Zone:

U.S. stocks fell for an eight straight day

U.S. stocks fell for an eighth straight day in a whipsaw session that sent the Dow Jones Industrial Average to its biggest point swing ever.
The Standard & Poor's 500 Index capped its worst week since 1933, as concern that the financial crisis will send the global economy into a recession pushed Morgan Stanley, CBS Corp. and Exxon Mobil Corp. down more than 8 %. The Dow recovered from a 697 point tumble and rose as much as 322 points in the last hour after an industry group said the bankruptcy auction of Lehman Brothers Holdings Inc.'s debt won't worsen credit losses.
“At this point, investors are just focusing on getting through the day,” said Alan Gayle, the Richmond, Virginia-based senior strategist at Ridgeworth Investments, which oversees about USD 70 billion. “The markets are being driven by emotion and rumour”.

Yen higher as turmoil continued

The yen rose against the euro and headed for its biggest weekly gain in a decade against the dollar as a global stock rout prompted investors to sell higher-yielding assets and pay back low-cost loans in Japan.

Crude oil below USD 80

Crude oil fell below USD 80 for the first time in a year and copper headed for its biggest weekly drop in more than 20 years on concern that the deepening financial crisis will push the global economy into a recession.

Far East Time Zone:

Euro zone agrees to an emergency rescue plan

Euro zone leaders have agreed on an emergency package to guarantee financial debt for five years and take a direct stake in banks if necessary to “avoid any failure of systemically relevant institutions”.

The fifteen states will also prop up the interbank markets to kick-start lending.

The accord falls short of calls for a pan-EU rescue fund to shore up the banks after the near total seizure of the credit markets last week, and may not prove enough to stem the collapse of investor confidence.

But it is the first clear signal that Europe’s leaders are facing up to the full gravity of a crisis that threatens to engulf everybody.

French President Nicolas Sarkozy said Germany, France and Italy would all come forward with national plans in time to soothe the markets on Monday. “None of our countries acting alone can end this crisis.

German officials have been scrambling all weekend to put together a EUR 400bn (GBP 317bn) rescue package for the country’s banks and insurance companies, fearing that any delay at this stage could set off a full-fledged crash. Frankfurt’s DAX index fell by 25% last week in the worst five-day slide in modern history.

The draft German plan includes some EUR 300 billion in guarantees to unlock the interbank lending markets, and a fund of up to EUR 100 billion to recapitalize banks.

Australia and New Zealand guarantees bank deposits to combat crises

Australia and New Zealand gave a blanket guarantee to all bank deposits on Sunday in a move likely to raise pressure on other economies to do the same, amid a crisis of confidence in the global financial system.

The two neighbors, both dominated by Australia's four major lenders, had portrayed themselves as having strong bank systems, especially Australia whose government and regulators gave repeated assurances it was well placed to weather the storm.

But Australian Prime Minister Kevin Rudd called a snap news conference on Sunday to say his government would guarantee Australia's entire deposit base of AUS 600- AUD 700 billion (USD 386-USD 450 billion) for three years and guarantee wholesale bank funding.

"We are in the economic equivalent of a national security crisis, and the challenges are great," Rudd said.
He referred to recent moves by other economies, such as Britain, Germany and Ireland, to extend guarantees or state aid to their banking systems and said Australianbanks could be disadvantaged if his government failed to act.

British banks set for 40 billion GBP rescue

Britain could pump more than 40 billion pounds (USD 69 billion) into four troubled major banks and take big stakes as part of a recapitalization due to be unveiled on Monday, sources familiar with the situation said.

Royal Bank of Scotland, HBOS, Lloyds TSB and Barclays were in line to receive the billions of pounds from investors and taxpayers in a bid to rescue them from the impact of the global credit crisis, said the sources, declining to be named.

The move could result in the government becoming the biggest shareholder, and even a majority investor, in Royal Bank of Scotland and HBOS -- effectively partly nationalizing two of Britain's biggest banks.

Talks among the banks, government officials and regulators were due to go on through the early hours of Monday to determine how much each would need from the 50 billion pounds offered by the government last week to offset the global credit crunch.

An announcement was expected before markets open on Monday, but details were still being fine-tuned, said the sources.

Oil rises over USD 3 to top USD 80 a barrel

Oil rose over USD 3 to top USD 80 a barrel on Monday, recouping some of previous session's 10 % loss, in a relief rally as leaders in the United States and euro zone took steps to pull the banking sector away from a deeper collapse.
U.S crude for November delivery was up USD 2.53 at USD 80.23 a barrel, after rising by as much as USD 3.07 or about 4 % at the start of electronic trading.

• Download Full Overnight Briefing

Published on  Mon, Oct 13 2008, 06:08 GMT