U.S Market Update

U.S Market Update

Tue, Jul 1 2008, 10:50 GMT
by Trade The News Staff

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DOW +54 S&P +7.5 Nasdaq +2.75

Oil remains an anxiety among traders as the short 4th of July trading week gets under way and indices struggle to stay in positive territory in choppy trading. Press reports circulated over the weekend that US covert operatives may already be in Iran paving the way for an attack on the country's nuclear weapons program; A senior Iranian Revolutionary Guard commander commented that Iran would close the Strait of Hormuz if it were attacked. Later, Qatar noted that oil supplies would not be disrupted if an attack on Iran would take place, later being supplemented by a US official promising to prevent Iran from closing such a route. Early this morning a UAE minister said he expected oil to hit $150/bbl (without indicating a time frame). Oil spiked to new record highs over $143/bbl, before falling into negative territory by mid morning. WB-8% is having a rough morning, dragging the financials down in early trading: Fitch put the bank's ratings on watch negative Friday afernoon, while the New York Post speculated that Prudential had exercised an option that may force WB to buy it out of their retail brokerage jv to the tune of $5B. A spokesperson later had no comment on such an action. In addition, the Wall Street Journal published an article overnight that examined the lack of trust among investors when it comes to banks, clearly not helping the financial sector this morning. In the tech sector, JP Morgan was heard making cautious comments before the bell on some cellular handset makers (likely related to SNE's downbeat comments on the market last Friday). Phone component manufacturers TXN-1% and RFMD-5% took a hit on the news. RIMM-3% is down in early trading. Solar names LDK-3.5% and CSIQ-2% are trading in the red after initially jumping on news the companies had signed a major wafer supply agreement. XMSR-4% and SIRI-4.5% are trading off after SIRI announced its post-merger guidance this morning, although highlighting contingencies to the merger of debt refinance and the impending FCC decision.

  • - The USD managed a brief reprieve during the New York morning after Chinese's PM called on US to take action to stabilize the dollar. The EUR/USD moved from 1.5820 to 1.5740 before retreating back towards 1.58. USD sentiment continues to be hampered by higher commodity prices, particularly oil as it continues to hold above the $142 level. Various Euro Zone officials continue to note concern over inflationary expectations, with the EU's Almunia noting that the euro FX rate is "a little" overvalued compared to other currencies. He added that the Euro Zone needs a clear position on FX, which it currently lacks.

  • - The JPY maintained its firmer tone in the session initially propelled by comments from Moody's, which raised Japan's JGB rating to Aa3 from A1 during the late Asian hours. USD/JPY was lower by over 40 pips at 105.80. but off its earlier lows of 105 handle. EUR/JPY cross was off 80+ pips at 167.00 and GBP/JPY was down 90+ pips at 211.00. Commodity currencies are slightly softer from opening levels in Asia. USD/CAD again held the support zone of 1.0060, despite better CAD GDP data for the month of April.

  • - Sept Bund -71 ticks at 110.65; Sept Gilts -54 at 104.54. Euro Stoxx 50 -0.25 at 3,333; FTSE +1.2% at 5,595; CAC 40 +0.2% at 4,405 and DAX -0.6% at.

Published on  Tue, Jul 1 2008, 10:53 GMT

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