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Overnight Briefing

73f8bf46-61fe-4f8c-8a8d-9999fc866358

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U.S. Stocks rose

Wed, Dec 3 2008, 06:34 GMT
by Jyske Bank Team

Jyske Bank

• Oil at three year low

• Australia economic growth slows

• Citigroup “core” Japan units not for sale

Today’s main events:

• EUR: Retail Sales

• USD: ADP Employment Change

• USD: FED’s Beige Book

• NZD: Interest Rate Decision

American Time Zone:

U.S. Stocks rose

U.S. stocks rose, rebounding from the market’s worst tumble since October, after General Electric Co. announced plans to maintain its dividend and the Federal Reserve extended terms of three emergency loan programs.

GE jumped 13 % and contributed the most to the gain in the Standard & Poor’s 500 Index.
Bank of America Corp., Wells Fargo & Co. and Citigroup Inc. advanced at least 9.3 % to lead a recovery in S&P 500 financial shares a day after the group’s biggest drop on record as the Fed said it will continue the lending programs until the end of April.

May contracts on the Chicago Board Options Exchange Volatility Index, or VIX, closed yesterday at 43.80, while futures expiring before then trade at higher levels, showing investors expect the S&P 500 to rise or fall at least 2.8 % a day through June 17, according to data compiled by Bloomberg. The last time the benchmark index for U.S. stocks moved that much during the same-sized span was 1932.

USD and JPY declined

The dollar and the yen declined the most against the euro in a week as central banks acted to stem the economic slump, reducing the currencies’ haven appeal.

The yen fell against the South African rand and Norway’s krone as the Bank of Japan said it will accept lower-grade corporate debt as collateral for loans.

Oil at three year low

Crude oil fell to the lowest in more than three years on signs the U.S., the world’s largest energy consumer, may be in the longest slump since World War II.

Far East Time Zone:

Australia economic growth slows

Australia's economy grew at its slowest pace in eight years last quarter as a gathering recession abroad and evaporating equity wealth at home crimped spending by consumers and businesses alike.

Were it not for a change in the weather which boosted the farm sector, the economy would have shrunk last quarter, highlighting how close Australia was to its own recession and underlining why the Reserve Bank of Australia (RBA) has slashed interest rates by 3 percentage points since September.

"The economy looks like it ground to a halt last quarter," said Michael Blythe, chief economist at Commonwealth Bank. "We ended up on the right side of the zero line, but there's not much margin for error from here."

Wednesday's report showed gross domestic product (GDP), or the value of all goods and services produced in Australia, rose a bare 0.1 % in the third quarter to an inflation-adjusted AUD 273.3 billion (USD 176 billion). That was under already subdued forecasts of a 0.2 % increase and compared to a 0.4 % rise in the second quarter.

After stripping out an improvement in agriculture thanks to an easing in the country's drought, the non-farm economy actually contracted by 0.3 % last quarter.

Compared to the third quarter of last year, GDP grew by 1.9 %, a sharp slowdown from 2.9 % the previous quarter and over 4.0 % in the third quarter of 2007.

Investors continue to price in more rate cuts from the RBA, which chopped its key cash rate by a bold 100 basis points to 4.25 % at its monthly policy meeting on Tuesday.
Interbank futures suggest rates could approach 3.0 % next year, levels not seen since the early 1960s.

Citigroup “core” Japan units not for sale Citigroup Inc said it has no plans to sell its brokerage and investment banking units in Japan, responding to speculation they could be unloaded as part of a global asset sale by the struggling U.S. bank.

It has no plans to sell broker Nikko Cordial Securities, investment bank Nikko Citigroup Ltd or other "core businesses in Japan", Citigroup's holding company in Japan said in a statement.
"Citigroup has exceptional businesses in Japan and our focus remains on delivering a universal bank model to our customers," Douglas Peterson, chief executive of Nikko Citi Holdings, said in the statement.

Citigroup did not mention trust bank unit NikkoCiti Trust and Banking Corp, which Japanese media has said would be sold in a deal that could raise up to 40 billion yen.

Oil rises more than USD 1

Oil rose towards USD 48 a barrel on Wednesday, recovering from a tumble of more than USD 100 off July peaks, but the upside could be limited, with further signs of weakening oil demand expected in upcoming weekly U.S. oil data.

Prices have lost more than 13 % since last week to stand at three-and-a-half-year lows, on a gloomy economic outlook and after OPEC deferred a likely third supply cut to later in December, while showing imperfect compliance with the two cuts it has already agreed on.

U.S. light crude for January delivery rose USD 1.04 to USD 48.00 a barrel by 3:30 GMT, having earlier risen as high as USD 48.05.

The contract settled down USD 2.32 at USD 46.96 on Tuesday, its lowest settlement since May 2005, after having broken through USD 47.27, USD 100 below its record high hit in July.

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Published on  Wed, Dec 3 2008, 08:07 GMT