The S&P 500 has poked its nose into positive ground and is holding on to a modest gain.
The advance toward positive ground marks an impressive turn in
sentiment. The tone through midday had been largely pessimistic, but
buyers emerged as stocks posted limited losses in the face of
disappointing economic data and continued threats of a global
slowdown. Buying in financials (+1.8%), the second largest economic
sector behind technology (+0.1%), also helped lift the broader market.
However, stocks are still in position to finish the week lower. At its
current level, the S&P 500 is down 3.6% week-to-date.
They see S&P 500 risks to 1200, potentially 1070 longer-term. Nikkei "should extend to the major wave and LT retracement level at 11690." They say too "Closes below 6219 in Dax and 3230 in Eurostoxx would point to 5999 and 3089 respectively. FTSE through
5261 should target 5071. Increasing bearish Trend Strength suggests
these moves lower should extend." Similarly negative views are
expressed for Bovespa, Hang Seng, Russian RTS, China H shares and MSCI Asia.
The Dow is outperforming its counterparts, though it remains in
negative ground. Its relative strength is owed to the weighting of
financial behemoths JPMorgan Chase (JPM 39.01, +1.10), Citigroup (C
18.88, +0.58), and American International (AIG 22.12, +0.90).
Coincidentally, shares of AIG were recently downgraded at Morgan Stanley to Equal Weight from Overweight.
In the S&P 500, financials represent the strongest performing
economic sector. They are currently up 1.5% after being up as much as
2.1%. At their low they were down 1.7%.
The yen rose to the highest level against the dollar
since July after the U.S. lost jobs for an eighth month and touched a
one-year high versus the euro as investors sold higher-yielding assets
funded in Japan.
Japan's yen rallied against most of the world's major currencies on
concern credit-market losses will lead to a global recession. The
Australian and New Zealand dollars dropped to a two-year low on
speculation a slump in stocks and commodities encouraged investors to
reverse carry trades.
``The market is in favor of risk reduction,'' said Robert Sinche, head
of global currency strategy at Bank of America Corp. in New York.
``People are eliminating positions they previously held, euro-yen,
Aussie-yen, in massive size.''
Japan's currency increased as much as 3.5 percent to 85.03 versus the
Australian dollar and 3 percent to 69.90 versus the New Zealand dollar
as investors reduced trades in which they get funds in a country with
low borrowing costs and buy assets where returns are higher. Japan's
0.5 percent benchmark interest rate compares with 4.25 percent in
Europe, 7 percent in Australia and 8 percent in New Zealand. The euro dropped for a seventh day against the dollar, its longest
decline since October 2006. The ECB kept its main refinancing rate at a
seven-year high of 4.25 percent yesterday and President Jean-Claude
Trichet told a press conference growth risks are on the
``downside.''The 15-nation euro has dropped more than 10 percent
against the dollar from the record high of $1.6038 set on July 15. The
ECB lowered its 2008 economic growth forecast yesterday to about 1.4
percent from 1.8 percent.
U.S. payrolls shrank by 84,000 last month, following a revised decline
of 60,000 in July, the Labor Department said today in Washington. The
median forecast of 76 economists surveyed by Bloomberg News was for a
reduction of 75,000. The jobless rate rose to 6.1 percent. The U.S. has
lost jobs every month this year, the longest losing streak since 2002.
``The fact the U.S. is weak doesn't brighten the prospect of the rest
of the G-10,'' said Steven Englander, a currency strategist at Lehman
Brothers Holdings Inc. in New York. ``As long as the market is feeding
into the risk-aversion story, it's reasonably good for the yen, but not
necessarily helpful for the rest of the G-10 against the dollar.''
Stocks stall near session highs. The S&P 500 is posting a modest loss of 0.4% after being down as much as 1.6%.
Financials (+1.0%) are supporting the market. Diversfied financial
services (+2.2%) and diversified banks (+1.7%) are seeing the most
buying interest.
The dollar (+0.4%) is trading higher for the seventh consecutive day,
benefiting from concerns regarding the state of world economies. On
that note, Russia's stock market plunged 6% today, Japan fell 2.8% and
London slipped 2.3%.
Economist Brian Wesbury at FTA says "The labor market is a lagging
indicator of economic activity. Real GDP growth accelerated in Q2 and
we believe will remain healthy in Q3/Q4. As a result, job losses will
turn to gains before year end."
FX strategists at CIBC World Markets say the sustained break below
long-term trend support at $1.4300 overnight "signals a definitive end
to the last 3-years of protracted euro strength." However, they prefer
to sell the rally in the pair and would use any run-ups toward $1.4550
to add to their shorts. "For now, $1.5000 should be used as a risk
point, and we are looking for euro-dollar to trade lower towards
$1.3500, the mid-point of the $1.33/$1.38 support zone," the
strategists say.
05.09 17:22
Dow -33.46 at 11154.77, Nasdaq -17.23 at 2241.81, S&P -6.18 at 1230.65
Reflecting the same pattern as yesterday, consumer staples are
resisting much of the deep, broad-based declines. The sector is down
just 0.1%, thanks to strength in packaged foods companies (+0.5%) and
tobacco (+1.7%).
Cigarette manufacturer Altria Group (MO 20.99, +0.33) is in advanced
talks to acquire fellow tobacco company UST (UST 66.51, +12.51),
according to New York Post. U.S. tobacco companies typically enjoy
steady business from the domestic market, but continually face scrutiny
from consumer health agencies.
05.09 16:34
BMO: "This employment report has recession written all over it."
Losses are meaningful as stocks trade near morning lows. Concerns of a
global slowdown are not only weighing on stocks, but oil prices as
well. Oil is now down more than 2% to trade around below $106 per
barrel. Oil has not settled below $106 per barrel since early April.
Oil's slide is weighing on the tech sector, which is down a hefty
2.1%. Its decline is the second most behind utilities (-2.2%).
05.09 15:53
CRUDE OIL: WTI Nymex crude oil breaks below $105.46 -- hits lowest level since April 4, 2008.
Stocks are oscillating in negative territory as buyers find little
motivation to move into the market. A lack of support during recent
sessions has led to further selling pressure.
Each of the major indices are back in bear market territory, which
means they are at least 20% off their respective highs. Those highs
were reached almost 11 months ago.
Just released, mortgage delinquencies totaled 6.41% during the second quarter. That is up from the prior reading of 6.35%.
05.09 15:15
RDQ Economics: "Rise in Aug the unemployment rate points to a very weak third quarter for growth. Odds have increased that the next Fed move could be a cut."
"Falling jobs and rising unemployment point to recession. The jump in
the unemployment rate will concentrate policymakers concerns on the
declining economy and soothe medium-term
worries about price pressures. As such, it puts the Fed even more firmly on hold than seemed apparent several weeks ago."
05.09 14:39
US Stocks Open: DJIA -60,98, Nadaq -14,87, S&P -7,71
Stocks continue to trend toward a downward open (S&P futures -13.70, Nasdaq futures -17.80). Dell is looking to divest its factories, which would
presumably cut operating costs, according to The Wall Street Journal.
The outfit would rely on contractual agreements with outside parties to
produce its computers. Drugstore.com and Rite Aid
announced a restructured strategic partnership that includes the launch
of a Rite Aid online store to be launched later this year. Rite Aid
will pay Drugstore.com $10 million in ten installments.
Nonfarm payrolls fell 84,000 during August, bringing the unemployment
rate to 6.1%, according to the latest government statistics. Payrolls
were expected to decline 75,000 after shedding 60,000 jobs in July.
The unemployment rate was expected to be unchanged at 5.7%.
Manufacturing payrolls fell 61,000, which is more than the 35,000
decline widely expected by economists.
The uncertainty in premarket action follows steep losses in the prior session. In its latest quarter, Take-Two
(TTWO) topped analysts' consensus earnings per share estimate with
relative ease. Hedge fund Atticus denies rumors it is liquidating,
according to The Wall Street Journal.
WTI
Nymex crude oil pares earlier losses, squeezing to $107.70 on back of
US Dollar weakness post US payrolls data. However, traders see this is
short-covering, with focus seen turning back towards demand destruction
later in the session.
Squeezes higher to take out $1.4300 area and thus the post-data high,
the speed of the move suggesting thin conditions prevail still after
the overnight rout in euro and yen related crosses. Traders say markets
remain skittish and thin, few spot traders willing to hold positions in
a market where swings are sharp, order-driven and barely controlled.
Lift brings euro to around the European recovery high area at $1.4315,
recent prints at $1.4320. Offers $1.4350.
- With inflation threat, ECB obliged to act
- Keeping price stability is best thing central bank can do
- Inflation expectations still above price stability
- Longer-term expectations still 2.4% and above
- Above stability expectations can't be taken lightly
- Data shows EMU economy is weakening
- Uncertainty surrounding growth is "particularly high"
The dollar fell versus the yen before a U.S. government report that
will probably show employment dropped for an eighth month. The yen also
jumped to a two-year high against the Australian and New Zealand
dollars as stocks and commodities slumped. The pound dropped for a
ninth day versus the dollar.
U.S. payrolls fell by 75,000 after declining by 51,000 in July,
according to the median estimate of economists. The unemployment rate
likely stayed at a four-year high of 5.7 percent.
The yen climbed to the highest in more than a year against the euro on
concern the credit-market slump will lead the world into a recession,
prompting investors to sell higher-yielding assets funded in Japan.
``These currency moves are huge,'' said Toru Tokoyoda, head of
foreign-exchange sales in Tokyo at Lehman Brothers Holdings Inc., the
fourth-largest U.S. securities firm. ``Volatility is likely to squeeze
higher on further gains in the yen as that would spur demand to hedge
against that move.''
The dollar's decline against the yen today followed a drop in U.S.
asset prices. The Standard & Poor's 500 Index tumbled yesterday by
the most in three months.
The euro dropped for a seventh day against the dollar, its longest
decline since October 2006. The ECB yesterday kept its main refinancing
rate at a seven-year high of 4.25 percent and President Jean-Claude
Trichet told a press conference growth risks are on the ``downside.''
The pound fell for a ninth day, reaching a two-year low after the Bank
of England yesterday kept its target lending rate at 5 percent. Policy
makers judged the fastest inflation in more than a decade outweighed
the risk that the British economy is sinking into a recession.
EUR/USD
consolidate around $1.4300, stops triggered on the break back under
$1.43230 as the rate move to $1.4220. A relief rally took the pair
back to $1.4260, with euro-dollar then slipping back towards the
overnight low in late morning trade. Early US trade provided added
momentum for a brief show under $1.4200, taking out an option barrier
before a bounce back above $1.4220. GBP/USD bids $1.7580/70, $1.7550. Offers $1.7650/60, $1.7680. USD/JPY holding around Y106.55, another attempt
higher topping out ahead of Y107.00, bids in the Y106.50 area then
giving way as euro-yen dipped back under Y152.00. Bids Y105.70,
barriers Y105.50/00, offers Y107.00, Y107.35/40.
Gains in the dollar may be limited by speculation a
deteriorating labor market will restrain consumer spending. U.S.
nonfarm payrolls fell by 75,000 jobs in August, more than the previous
month's decline of 51,000, according to a survey before the Labor
Department report due today at 12:30 GMT.
The yen climbed to the highest in more than a year against the euro on
concern the credit-market slump will lead the world into a recession,
prompting investors to sell higher-yielding assets funded in Japan.
The dollar fell versus the yen before a U.S. government report that
will probably show employment dropped for an eighth month. The yen also
jumped to a two-year high against the Australian and New Zealand
dollars as stocks and commodities slumped. The pound dropped for a
ninth day versus the dollar.
U.S. payrolls fell by 75,000 after declining by 51,000 in July,
according to the median estimate of economists. The unemployment rate
likely stayed at a four-year high of 5.7 percent.
``These currency moves are huge,'' said Toru Tokoyoda, head of
foreign-exchange sales in Tokyo at Lehman Brothers Holdings Inc., the
fourth-largest U.S. securities firm. ``Volatility is likely to squeeze
higher on further gains in the yen as that would spur demand to hedge
against that move.''
The dollar's decline against the yen today followed a drop in U.S.
asset prices. The Standard & Poor's 500 Index tumbled yesterday by
the most in three months.
The euro dropped for a seventh day against the dollar, its longest
decline since October 2006. The ECB yesterday kept its main refinancing
rate at a seven-year high of 4.25 percent and President Jean-Claude
Trichet told a press conference growth risks are on the ``downside.''
The pound fell for a ninth day, reaching a two-year low after the Bank
of England yesterday kept its target lending rate at 5 percent. Policy
makers judged the fastest inflation in more than a decade outweighed
the risk that the British economy is sinking into a recession.
Resistance 3: Y110.30 Resistance 2: Y108.50 Resistance 1: Y107.20
Current price: Y106.37 Support 1: Y106.30
Support 2: Y105.60
Support 3: Y104.70
Comments: Tech on yen has't changed. Support comes at Y106.30 (23.6% of
yesterday’s decline), further – at Y105.60 (yesterday’s low). Below losses may
widen to Y104.70 (Jul 17 low). Above Y107.20/30 resistance is around
Wednesday’s highs on Y108.50/60.
05.09 11:00
Germany Industrial production (July) adjusted -1.8%, Y/Y -0.6%
Resistance 3: Chf1.1430 Resistance 2: Chf1.1260
Resistance 1: Chf1.1170
Current price: Chf1.1145 Support 1: Chf1.1040
Support 2: Chf1.0940 Support 3: Chf1.0900
Comments: USD/CHF
still holds a bit above the lower bound of the upward channel from Jul 16,
limited today by Chf1.1040/Chf1.1430 (key support/resistance respectively). Under
Chf1.1040 losses may widen to Sep 01 lows on Chf1.0940/50, then – to 23.6% of
Chf1.0015 - Chf1.1180 rise at Chf1.0900. Resistance comes at yesterday’s highs on
Chf1.1170 (also Jan 07 highs). Above rate may recover to Chf1.1260 and then –
to a key resistance at channel line on Chf1.1430.
Resistance 3: $1.8060
Resistance 2: $1.7860
Resistance 1: $1.7740
Current price: $1.7640
Support 1: $1.7530 Support 2: $1.7420
Support 3: $1.7360
Comments: The pound has slightly become stronger, but as a whole tech has't changed. Minor support is around session low on
$1.7530 with a break under will target channel line on $1.7420 (also 50% of $1.3560
- $2.1160 rise). Below bearish sentiment will grow and bring the rate to $1.7360.
Resistance 3:$1.4420
Resistance 2: $1.4370 Resistance 1: $1.4300
Current price: $1.4236
Support 1: $1.4200 Support 2: $1.4130
Support 3: $1.4120
Comments: Tech on euro has't changed. The euro broke
down trend line from Dec 2005 at $1.4300/10. Today’s support is around session low
at $1.4200 with a break under will target further decline to $1.4130/40 (channel
support line from Jul 22) and then – to $1.4120 (Oct 21’07 low). Back above $1.4300/10
will open the way to $1.4370 (50% of yesterday’s sell-off) and then – to $1.4420
(61.8%).
The yen climbed to the
highest in more than a year against the euro on concern that a credit- market slump will lead the
world into a recession, prompting investors to sell higher-yielding assets.
The dollar fell versus
the yen before a U.S.
government report that will probably show employment fell for an eighth month.
The euro declined after Luxembourg's
Finance Minister Jean-Claude Juncker said the currency is ``overvalued.''
The euro dropped for a seventh day against the dollar,
its longest decline since October 2006. The ECB yesterday kept its main
refinancing rate at a seven-year high of 4.25%.'
Europe's currency
extended its decline
after Luxembourg's
Juncker told reporters the currency is ``effectively overvalued.''
Sterling fell for a ninth day after the Bank
of England yesterday kept its target lending rate at 5%.
EUR/USD tested lows around $1.4210 before
rebounded to $1.4310 and back to $1.4280.
GBP/USD recovered after earlier dip from $1.7620
to $1.7535, currently holding near $1.7613.
USD/JPY sharply fell to Y105.67 before back
up to Y107.15. Later rate corrected to Y106.40.
Gains in the dollar
may be limited by
speculation a deteriorating labor market will restrain consumer spending.
Companies in the U.S. cut an estimated 33,000 jobs
in August, a private report based on payroll data showed today. The decrease
followed a revised gain of 1,000 for the prior month that was lower than
previously estimated, ADP Employer Services said.
U.S. nonfarm payrolls fell by 75,000
jobs in August, more than the previous month's decline of 51,000, according to
a survey before the Labor Department report due tomorrow.
Japan's
benchmark stock indices ended the morning session sharply lower across the
board. The benchmark Nikkei 225 was 345.43 points, or 2.75%, lower at 12212.23.
The broader-based TOPIX was down 30.81 points at 1184.94.
Nippon
Electric Glass Co. tumbled 14% to a three-year low. Mitsui O.S.K. Lines Ltd.
plummeted 7.3%, leading shipping lines to the lowest in seven months. Yokohama
Rubber Co., Japan's
second-biggest tiremaker, jumped 3.8% after saying it will raise prices by as
much as a 10th.
Nippon
Electric Glass dived 14% to the lowest since August 2005, making the company
the second-worst performer on the MSCI World Index. Asahi Glass Co., Asia's largest glassmaker, lost 3.4%.
Mitsui
O.S.K. plunged 7.3%, the worst slump since Feb. 6. Smaller rival Kawasaki Kisen
Kaisha Ltd. retreated 5.9%, while Nippon Yusen K.K., Japan's biggest marine transport
company, fell 5%.
European stocks tumbled the most in
seven weeks after European Central Bank President Jean-Claude
Trichet said policy makers remain focused on inflation even as the economy
slows.
Barclays
Plc slumped 6% and Banco Santander SA sank 4% as the ECB said it will tighten
its lending rules to stop them being exploited by financial institutions stung
by the yearlong credit crisis. Siemens AG, Europe's
biggest engineering company, retreated 4.8% as German factory orders
unexpectedly fell and Dresdner Kleinwort downgraded the shares. Saab AB
slid 20% after the Swedish maker of the Gripen fighter plane reduced its profit
forecast.
The ECB kept its benchmark interest
rate at a seven-year high of 4.25%, while the BOE held borrowing costs at 5%, as
inflation concerns made it harder for policy makers to respond to the risk of
recession.
Stocks tumbled
Thursday, with the
Dow sinking over 300 points, as sluggish retail sales and some dour readings on
the labor market exacerbated worries about a global economic slowdown.
The concerns overshadowed a
better-than-expected sales report from Wal-Mart Stores and surprisingly strong
readings on services sector.
The world's leading retailer Wal-Mart reported
stronger-than-expected August sales at its stores open a year or more, a metric
known as same-store sales. Sales rose 3% versus forecasts for a rise of 1.6%
and included the critical back-to-school period.
While Wal-Mart and select other discount
retailers benefited from the need for a strapped consumer to still buy
essentials, mall-based clothing chains and high-end sellers suffered.
Clothing chain Abercrombie & Fitch said
sales fell 11%, versus forecasts for a 7.9% drop.
Before the open report from payroll services firm
ADP showed that the private sector lost 33,000 jobs in August, eclipsing
forecasts for a drop of 30,000.
The report can sometimes be a harbinger of the
broader government-issued monthly employment report, due Friday. Employers are
expected to have cut 75,000 non farm jobs from their payrolls, after cutting 51,000 in July.
The euro fell the most
in almost four weeks against the dollar after European Central Bank President
Jean-Claude Trichet said the region is undergoing an ``episode of weak
activity,'' signaling policy makers aren't inclined to lift interest rates
soon.
The European single
currency dropped for a sixth day as Trichet said downside risks to growth prevail. The ECB kept its main
rate at a seven-year high of 4.25%.
The Bank of England kept
its target rate at 5%.
The euro has dropped 6.4% versus the dollar
since Aug. 7, when Trichet said growth in the countries using the euro will be
``particularly weak'' through the third quarter.
The ECB today lowered
its 2008 economic growth forecast to about 1.4% from 1.8%, and its 2009 prediction to 1.2% from 1.5%.
EUR/USD printed high at $1.4540 before
falling down to $1.4211, triggering stops and bids.
GBP/USD fell from $1.7860 to $1.7530.
USD/JPY declined from Y108.50/60 to Y105.60
before rebounded to Y107.30.
Gains in the dollar
may be limited by
speculation a deteriorating labor market will restrain consumer spending.
Companies in the U.S. cut an estimated 33,000 jobs
in August, a private report based on payroll data showed today. The decrease
followed a revised gain of 1,000 for the prior month that was lower than
previously estimated, ADP Employer Services said.
U.S. nonfarm payrolls fell by 75,000
jobs in August, more than the previous month's decline of 51,000, according to
a survey before the Labor Department report due tomorrow.
Resistance 3: Y110.30 Resistance 2: Y108.50 Resistance 1: Y107.20 Current price: Y106.73 Support 1: Y106.30 Support 2: Y105.60 Support 3: Y104.70 Comments: Thursday USD/JPY broke under trend line from Mar 17 at Y107.20 (strong resistance), refreshing 6-weeks lows. Support comes at Y106.30 (23.6% of yesterday’s decline), further – at Y105.60 (yesterday’s low). Below losses may widen to Y104.70 (Jul 17 low). Above Y107.20/30 resistance is around Wednesday’s highs on Y108.50/60.
Resistance 3: Chf1.1430 Resistance 2: Chf1.1260 Resistance 1: Chf1.1170 Current price: Chf1.1123 Support 1: Chf1.1040 Support 2: Chf1.0940 Support 3: Chf1.0900 Comments: USD/CHF retreats after employment ADP report showed yesterday employment fell 33K, weighting on Friday's Non-farm payrolls expectations. USD/CHF still holds a bit above the lower bound of the upward channel from Jul 16, limited today by Chf1.1040/Chf1.1430 (key support/resistance respectively). Under Chf1.1040 losses may widen to Sep 01 lows on Chf1.0940/50, then – to 23.6% of Chf1.0015 - Chf1.1180 rise at Chf1.0900. Resistance comes at yesterday’s highs on Chf1.1170 (also Jan 07 highs). Above rate may recover to Chf1.1260 and then – to a key resistance at channel line on Chf1.1430.
Resistance 3: $1.8060 Resistance 2: $1.7860 Resistance 1: $1.7740 Current price: $1.7582 Support 1: $1.7530 Support 2: $1.7420 Support 3: $1.7360 Comments: GBP/USD continues to decline within the downward channel from Jul 22, limited today by $1.7420/$1.8060 (key support/resistance respectively). Yesterday’s Nationwide house prices index showed the slump in UK housing sector persist. Moreover, BOE left rate unchanged at current 5.0%. Minor support is around session low on $1.7530 with a break under will target channel line on $1.7420 (also 50% of $1.3560 - $2.1160 rise). Below bearish sentiment will grow and bring the rate to $1.7360.
Resistance 3:$1.4420 Resistance 2: $1.4370 Resistance 1: $1.4300 Current price: $1.4293 Support 1: $1.4200 Support 2: $1.4130 Support 3: $1.4120 Comments: EUR/USD rebounds after it fell the most in almost four weeks against the dollar yesterday after European Central Bank President Jean-Claude Trichet said the region is undergoing an “episode of weak activity”, signaling policy makers aren't inclined to lift interest rates soon. Thursday ECB key lending rate was left unchanged at 4.25%. As a result of yesterday’s collapse the euro broke down trend line from Dec 2005 at $1.4300/10. Today’s support is around session low at $1.4200 with a break under will target further decline to $1.4130/40 (channel support line from Jul 22) and then – to $1.4120 (Oct 21’07 low). Back above $1.4300/10 will open the way to $1.4370 (50% of yesterday’s sell-off) and then – to $1.4420 (61.8%).
05.09 07:05
Major European bourses are initially seen trading lower again Friday, extending the previous session's steep losses: the FTSE down 54, the DAX down 69, the CAC down 54 and the Eurostoxx 50 down 50
