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Overnight Briefing

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U. S. Stocks rose again

Thu, Dec 4 2008, 07:18 GMT
by Jyske Bank Team

Jyske Bank

• EUR lower ahead of rate announcement

• New Zealand cut rates

• Yen and dollar steadies

Today’s main events:

• SEK: Interest Rate Decision

• GBP: Interest Rate Decision

• EUR: Interest Rate Decision

• USD: Factory Orders

American Time Zone:

U.S. Stocks rose again

U.S. stocks rose for a second day as a jump in online spending and a record increase in mortgage applications lifted retailers and banks, overshadowing concern the worsening recession will reduce demand for commodities.

Amazon.com Inc. rose 10 % after research firm ComScore Inc. said Internet purchases at U.S. retailers increased 15 % on Dec. 1. Morgan Stanley and Pulte Homes Inc. climbed more than 13 % as government cash injections into the mortgage market spurred the increase in home-loan applications.

Freeport-McMoRan Copper & Gold Inc. slid 17 % as the largest public copper company cut production and suspended its dividend amid “dramatic” price drops.

EUR lower ahead of rate announcement

The euro traded near a one-week low against the dollar on bets the European Central Bank will cut borrowing costs by a half-percentage point tomorrow.

The yen fell against the dollar and the euro after stocks erased losses, prompting speculation that investors will sell higher-yielding assets and pay back low-cost loans in Japan at a slower pace.

The pound dropped against the yen, the dollar and the euro as services in the U.K. shrank at the fastest rate in at least 12 years and consumer sentiment fell.

New Zealand cut rates

New Zealand’s central bank cut its benchmark interest rate by a record 1.5 percentage points to 5 % to help steer the economy out of it worst recession in 18 years.

Oil declined further

Crude oil fell after an Energy Department report showed that U.S. refineries curbed operating rates as the recession crimps fuel demand.

Far East Time Zone:

Yen and dollar steadies

The yen and the dollar steadied against other major currencies on Thursday ahead of interest rate decisions in the euro zone and Britain, after having risen earlier on concerns about a long and deep global recession.

But euro and the British pound remained vulnerable before decisions by the central banks, with expectations high that they will ease monetary policy aggressively to boost deteriorating economies and counter the threat of deflation. Asian shares rose after a late rally in U.S. stocks, but demand for the low-yielding yen and the safe-haven greenback was intact after a slew of dismal data around the world kept investors concerned about the depth of the global recession.

Japanese companies cut investment in the third quarter by a higher-than-expected 13 % from a year ago, a report showed, leading economists to expect the country's gross domestic product data, which has already initially shown a contraction, will be adjusted lower.

"Having seen weak economic numbers coming in one after another, it's difficult for market sentiment to improve dramatically," a senior trader at a major Japanese bank said.

The euro fell 0.1 % from late New York trade at USD 1.2709. The European Central Bank is seeing cutting rates on Thursday by at least 50 basis points to 2.75 %, but many economists are expecting a 75 basis point cut.

Sterling was down 0.1 % to USD 1.4770, having pared some losses made after data showing that Britain's service sector shrank faster than expected in November. Against the yen, it edged down 0.1 % to 137.75 yen but stayed above a 13-year low around 136.30 yen hit the previous day.

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Published on  Thu, Dec 4 2008, 07:24 GMT