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U.S Market Update
Mon, Jun 2 2008, 15:54 GMT
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Real-time 24hr global markets news in both audio & text formats. Free Trial.- Stocks fell in pre-market trading and continued lower after the bell as turbulence at a UK bank deepened fears that round two of the credit crisis may have arrived. UK mortgage bank Bradford and Bingley noted on Sunday evening that it expected to release a "stunning" profit warning this week and announce the resignation of its CEO. The bank scaled back a planned rights issue on the news. WB was under serious pressure after ousting CEO Kennedy Thompson, blaming the former executive for losses and the bank's plummeting share value. Chairman Lanty Smith was appointed interim CEO and worries that their next earnings announcement could be exceeding bleak are mounting. WM was down slightly after announcing it would separate the CEO and chairman roles, in an attempt to placate shareholders after three quarters of huge losses. Lehman is off 3% after a Merrill downgrade and fresh cautious comments from Oppehheimer's Whitney. All these stories are helping lead financial stocks lower and pushing some investors to the relative safety of U.S. Treasuries. The 10-year yield has slipped back below 4% while the two-year is testing 2.50% again. The morning's economic data did little to inspire, with the ISM manufacturing index seen rising in May q/q with another strong prices paid component, while April construction spending fell less than anticipated. The annual meeting of the American Society of Clinical Oncology (ASCO) has highlighted healthcare, with MEDX-10% after unimpressive results from ongoing clinical trials and IMCL-6% as investors were undewhelmed by trial data for its Erbitux cancer treatment. Elsewhere in healthcare news, ACOR+30% soared after the biotechnology company said its multiple sclerosis candidate met its goal in a late-stage trial. In other news, HRS-15% after announcing this morning that it was not pursuing a merger or sale of the company after several weeks of rumors and comments to the contrary.
- Dealers remained conscience of the return of risk aversion, driven by Bradford and Bingley's confirmation that it will restructure its recently announced rights offering. GBP probed below 1.9600, hitting two-week lows, while carry-related pairs were broadly lower. USD/JPY tested below 104.70 level, while EUR/JPY was over 160 pips lower at 162.40 area. GBP/JPY was off 260 pips at 205.50 area. EUR/CHF was down 50 pips at 1.6170. EUR/USD was off its worst levels of 1.5490. Dealers noted that comments from ISM's Ore as the reason for the retracement in the USD off its best levels. Ore noted that a stronger USD would be a headwind for manufacturers. The export story remains "very, very strong," global demand, not supply issues, is driving price increases. Overall EUR/USD is maintaining its trading range from the latter part of last week of 1.5470 to 1.5570. Various ECB members reiterated their concerns over inflation while singing the praises of the 10th anniversary of the central bank.
Published on Mon, Jun 2 2008, 15:55 GMT
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