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Overnight Briefing

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U.S. Stocks slid

Tue, Dec 2 2008, 05:54 GMT
by Jyske Bank Team

Jyske Bank

• JPY higher as stocks drop

• Australia cuts interest rate with 100 bp

• Japan business mood slides

• Oil hits 3 ½ year low

Today’s main events:

• NOK: Current Account

• CHF: Consumer Price Index

• EUR: Producer Price Index

American Time Zone:

U.S. Stocks slid

U.S. stocks slid, halting a five-day advance, on growing concern the global economic slump is deepening and consumers’ access to credit is shrinking.

General Electric Co. and Caterpillar Inc. lost more than 6 % following a report that manufacturing contracted at the fastest pace in 26 years. American Express Co. and JPMorgan Chase & Co. fell more than 9 % on Oppenheimer & Co. analyst Meredith Whitney’s prediction that credit-card companies will cut available lending by 45 %, or more than USD 2 trillion.

Treasuries rose, pushing yields to record lows, as Federal Reserve Chairman Ben S. Bernanke said the central bank may buy bonds to combat the worsening recession.

JPY higher as stocks drop

The yen rose against the euro and the dollar as shrinking global manufacturing and a drop in stocks prompted speculation investors will buy back Japan’s currency at the expense of higher-yielding assets.

The dollar appreciated to a one-week high versus the euro as investors sought the relative safety of U.S. government debt.

Oil fell as OPEC delay decision

Crude oil fell below USD 50 a barrel after the Organization of Petroleum Exporting Countries deferred a decision to reduce output until its next meeting on Dec. 17.

Far East Time Zone:

Australia cuts interest rate with 100 bp

Australia's central bank cut its key benchmark cash rate 100 basis points to 4.25 % on Tuesday, the fourth easing in as many months, as it fought to save the economy from a global recession.

The move by the Reserve Bank of Australia (RBA) brought its combined cuts since September to an eye-popping 300 basis points, the most aggressive easing since the recession of the early 1990s.

In a brief statement following its monthly policy meeting, the central bank said a further significant reduction in cash rates was warranted to take policy to an expansionary setting. RBA also said a significant slowdown in domestic demand was underway and domestic inflation would likely soon start to fall.
Financial market sentiment was fragile, world growth was slowing and global inflation was set to moderate significantly.

Japan business mood slides

Confidence among Japanese manufacturers fell at its sharpest pace on record in November, fuelling debate about rate cuts, as the Bank of Japan meets to consider measures to ease a squeeze on funding for firms.

Japanese stocks slid 4.7 % and the yen firmed to a one month high, as global manufacturing figures painted a bleak outlook for the world's factories.

The BOJ will hold an emergency policy meeting from 4:00 GMT to discuss measures to help ease a squeeze in credit markets as firms face a tough time securing finance to tide them over the end of the year.

No change in rates is expected at the meeting, which will be followed by news conference comments from Governor Masaaki Shirakawa, due for release around 7:00 GMT.

The Reuters Tankan, a monthly poll of big Japanese firms that tracks the BOJ's closely watched quarterly tankan next due on Dec. 15, showed business confidence had fallen sharply to its lowest in seven years.

Oil hits 3 ½ year low

Crude oil fell more than USD 1 a barrel to just above a 3- year low on Tuesday, extending the previous session's falls as gloom about the economy grew and after producer group OPEC decided to leave output unchanged. By 4:30 GMT, U.S. light crude for January delivery traded USD 1.52 lower at USD 47.76 a barrel.

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Published on  Tue, Dec 2 2008, 06:00 GMT