The heavy equipment maker Caterpillar Inc expects record sales
this year as booming demand for construction and mining equipment in
China and other emerging economies offsets weakness in the U.S. market.
The mortgage finance giant Fannie Mae shook up its executive
ranks; its CFO and two other top executives are leaving. Fannie
promoted David Hisey, formerly controller, to CFO and Peter Niculescu
to chief business officer.
The world's biggest soft drink maker The Coca-Cola Company was cut to ``neutral'' from ``outperform'' by Credit Suisse, which said rival PepsiCo is a better bet.
The tech giant Microsoft Corporation has unveiled its Internet
Explorer 8 browser equipped with a privacy feature that could threaten
the advertising model of Web search rivals such as Google.
"With growth faltering among our European tradingpartners, and with the
dollar perhaps past its lows, we should not count on net exports to
show the same strength in the quartersahead." On unemploy claims, she
says "consistent with a rising unemployment rate through year-end and
well into 2009."
Stocks continue to sport strong gains but remain off their session highs.
The advance has given the Dow a week-to-date advance of 0.5% and the
S&P 500 a week-to-date advance of 0.3%. The Nasdaq is down 0.4%
this week.
Selling pressure in Treasuries has eased. The 10-year Note is now down
7 ticks after being down 15 ticks just recently. The 30-year Bond is
trading at the unchanged mark.
The dollar rebounded from the lowest level against the euro this week
as the U.S. economy expanded in the second quarter faster than
previously estimated and crude oil prices decreased.
The pound dropped to near a record low against the euro and depreciated
versus the dollar as house prices in Britain fell this month at the
fastest annual pace in almost 20 years. The decline in crude oil pushed
Canada's dollar down the most in almost three weeks.
Sterling declined. The average value of a home in the U.K. fell 10.5
percent in August to 164,654 pounds ($301,500), the biggest drop since
the final quarter of 1990, Nationwide Building Society said today.
Crude oil for October delivery dropped 3.2 percent to $114.41 a barrel
The Commerce Department reported a 3.3 percent annualized increase in
gross domestic product from April through June that was higher than the
previous estimate of 1.9 percent. The economy grew at a 0.9 percent
pace in the first quarter.
The euro rose yesterday the most against the dollar in almost a week as
European Central Bank council member Axel Weber said in an interview in
Frankfurt that policy makers may need to raise borrowing costs once the
economic outlook ``brightens'' toward the end of the year. Annual
inflation of 4 percent in the 15 nations using the euro is twice the
ECB's target of just below 2 percent.
``We're still feeling the impact of hawkish comments,'' said Dustin
Reid, a senior currency strategist at ABN Amro Bank NV in Chicago.
28.08 17:40
Dow +191.83 at 11694.34, Nasdaq +24.37 at 2406.83, S&P +14.78 at 1296.44
"GDP reports implies that the trade sector may have had enough momentum
at the end of the second quarter to offset a decline in consumer
spending. However, the pronounced deterioration of economic conditions
in Europe, Canada and Japan along with the somewhat stronger dollar
will make it much harder to sustain the healthy growth in exports."
Stocks gains accelerated Thursday morning, as a surprisingly strong
reading on second-quarter economic growth took the edge off recession
fears and oil prices backed off morning highs.
Gross domestic product, the broadest measure of the economy, increased
by a 3.3% annualized rate in the second quarter, the government
reported. The revised reading improved on the initial report of 1.9%
issued late last month and topped expectations for a growth rate of
2.7%.
It was the best reading since the third quarter of 2007 and showed a
marked improvement from the sluggish 0.9% pace in the first quarter.
The growth was partly attributable to a spike in exports as a result of
the weak dollar. However, many experts also credited the rise to the
more than $90 billion in economic stimulus checks that reached
taxpayers during the quarter, suggesting that a sustained pickup is
unlikely now that the rebates have ended.
In other economic news, a separate government report showed that the
number of Americans filing new claims for unemployment fell for the
third week in a row, meeting expectations. Oil prices briefly surged to a session high of
$120.50 a barrel before retreating as Tropical Storm Gustav continued
to threaten key oil production facilities in the Gulf of Mexico.
U.S. light crude oil for October delivery fell 32 cents to $117.83 a barrel on the New York Mercantile Exchange.
Fannie Mae rose after announcing management changes
late Wednesday, including the departure of the chief financial officer
and two other executives, and the promotion of three other executives. Tiffany & Co. reported stronger fiscal second-quarter sales and earnings that topped expectations and also boosted its full-year forecast.
In the bond market, Treasury prices slipped, raising
the yield on the benchmark 10-year note to 4.41% from 3.76% late
Wednesday. Prices and yields move in opposite directions.
COMEX gold for December delivery rose $4.80 to $838.80 an ounce.
"On unemploy claims, the very gradual decline over the last three weeks
suggests a fundamental deterioration in labor market conditions is also
at work. We have therefore revised down our forecast for August nonfarm
payroll employment growth to -85,000 from -70,000 previously."
28.08 16:20
CRUDE OIL: Trading with losses now as it slips to $117.35, down $0.80ish on the day and off from morning highs at $120.50.
28.08 16:05
Tropical storm Hanna forms in Atlantic -- becomes eigth tropical storm of the season, according to the National Hurricane Center
Squeezing lower, a mix of pressure seen from real money euro-sterling
demand and euro-dollar slippage. Rate currently trades around $1.8300,
a break below to bring Wednesday's lows at $1.8285 back into view. Bids
noted here between $1.8285/80 with stops being confirmed on a break
below. Further demand then noted at $1.8250.
- Inflation will 'plummet like a rock' in medium term, debate has got
very short sighted
- UK economy already in contraction, expects several succesive quarters
of contraction
- Expects unemployment growth to accelerate, jobless could hit 2mln by
end of year.
- 'Misguided' to worry about inflation expectations when economy going
into recession
- Weaker sterling boost to exports unlikely to be 'great rescuer'
- Need to act now, get ahead of the curve, we have got behind the
curve.
Economist Dana Saporta at Dresdner says of
GDP, "With growth faltering among our European trading partners, and
with the dollar perhaps past its lows, we should not count on net
exports to show the same strength in the quarters ahead." On unemploy
claims, she says "consistent with a rising unemployment rate through
year-end and well into 2009."
Stocks have opened in positive territory. All three of the major indices are sporting solid gains.
All ten of the major economic sectors are moving higher. Consumer
staples (+0.1%) is currently the primary laggard, while the influence
of financials (+1.2%) provide leadership. Telecom (+1.6%) is the best
performing sector, though.
The interest in stocks, bolstered by a better-than-expected second
quarter GDP reading and a reduction in weekly jobless claims, has put
pressure on Treasuries. The resiliance of the U.S. economy is
encouraging to equity investors looking for a higher return than
offered by government debt. The benchmark 10-year Note is down 10
ticks.
28.08 14:23
BAS sasys "high level of continuing claims indicates that jobs remain hard to find and that labor demand is soft" and ests Aug jobs at -70k.
S&P futures vs fair value: +8.3. Nasdaq futures vs fair value: +11.3.
Clothing and apparel retailers Genesco (GCO), Coldwater Creek (CWTR), and Men's Wearhouse
(MW) all announced better-than-expected earnings results for the latest
quarter, excluding extraordinary items. Their respective outlooks,
however, were mixed. Genesco issued upside guidance, and Coldwater
Creek announced a forecast that is in-line with the consensus
forecast. Men's Wearhouse issued downside guidance. Meanwhile, Sears Holdings (SHLD) missed the consensus earnings per share estimate of $0.33, by bringing in just $0.21 per share, excluding reserves. Williams-Sonoma (WSM) bested the consensus earnings per share estimate by $0.01, bringing in $0.08 per share, but it issued downside guidance.
EUR/USD fell
down to $1.4730 area in the wake of the upbeat US Q2 GDP revision, the
pair slicing back through bids at $1.4750 before finding a cushion from
further demand at $1.4730/35. Stops located below $1.4730 if triggered
to open the way down to $1.4700/10 (session low). Under
there is a chance to test $1.4615/20 and Tuesday’s lows on $1.4560/70.
The euro rose against the dollar for a second day on speculation the
region's interest-rate advantage over the U.S. will draw investors
after a European Central Bank official signaled a cut in borrowing
costs is unlikely.
The euro traded at a four month-high against the British pound after ECB policy makers Axel Weber and Lucas Papademos said
yesterday that rates may have to rise as the economy recovers. The U.S.
dollar fell for a second day against the yen as the price of oil
climbed, threatening economic growth in the largest energy consumer.
``There seems to be a concerted ECB drive to correct market perceptions
that policy makers are even considering a rate cut and that's
supporting the euro in the short term,'' said Kamal Sharma, a currency
strategist in London at JPMorgan Chase & Co. ``Given the outlook
for U.S. financial institutions, there's also reasons to suggest that
the dollar looks vulnerable at these levels.''
The euro stayed higher after a government report showed unemployment
fell in Germany in August by an adjusted 40,000, more than expected by
economists and pushing the jobless rate to the lowest level in 16 years.
``The very substantial dollar gains of the past month are not justified
by the outlook for the U.S. economy,'' said Halpenny. ``The fallout
from the collapse of the housing market is in its early stages and will
undermine economic growth for some time. Meanwhile, the outlook for the
euro region is not as bleak as some are forecasting.'' Cable remains under pressure after weak CBI and housing data
EUR/USD got support at $1.4750 before gained to
$1.4800. Offers spotted at $1.4800/15, $1.4840/50. more on approach to
$1.4860/65. Bids $1.4750.
GBP/USD saw cable dip to $1.8340 on release of
Nationwide UK house price data, but willing buyers emerged to take rate
to $1.8390. Rate eased to $1.8330 before settling into a basic
$1.8350/80 range ahead of CBI data. Disappointing CBI release dropped
cable from $1.8370 to $1.8350, with secondary sales allowing it to
challenge support at $1.8325/20, before bouncing to $1.8360.
USD/JPY posted session low at
Y108.70, before gained back to Y109.30. Bids Y108.80. Offers Y109.30, Y109.60/65.
In US focus will be on revised 2Q GDP data due at 1230GMT. Economists expect economy rose 2.7% q/q after previously released 1.9%.
Declines in the dollar may be limited in case of a strong data.
Dollar posted new lows for the day in US dealing, triggering a few
stops on the break below Chf1.0900. Four-week channel support lies at
Chf1.0860, while bids are noted at Chf1.0855/45 with additional stops
below.
GBP/USD dropped from around $1.8368 to $1.8330/20 on release of
disappointing CBI data, but rate again seen meeting demand on the dip,
currently buoyed between $1.8350/55. Bids located at $1.8330/20 ahead of $1.8300. Offers remain in place toward
$1.8400.
The euro rose against the dollar for a second day on speculation the
region's interest-rate advantage over the U.S. will draw investors
after a European Central Bank official signaled a cut in borrowing
costs is unlikely.
The euro traded at a four month-high against the British pound after ECB policy makers Axel Weber and Lucas Papademos said
yesterday that rates may have to rise as the economy recovers. The U.S.
dollar fell for a second day against the yen as the price of oil
climbed, threatening economic growth in the largest energy consumer.
``There seems to be a concerted ECB drive to correct market perceptions
that policy makers are even considering a rate cut and that's
supporting the euro in the short term,'' said Kamal Sharma, a currency
strategist in London at JPMorgan Chase & Co. ``Given the outlook
for U.S. financial institutions, there's also reasons to suggest that
the dollar looks vulnerable at these levels.''
The euro stayed higher after a government report showed unemployment
fell in Germany in August by an adjusted 40,000, more than expected by
economists and pushing the jobless rate to the lowest level in 16 years.
``The very substantial dollar gains of the past month are not justified
by the outlook for the U.S. economy,'' said Halpenny. ``The fallout
from the collapse of the housing market is in its early stages and will
undermine economic growth for some time. Meanwhile, the outlook for the
euro region is not as bleak as some are forecasting.''
Declines in the dollar may be limited before revisions to the
second-quarter gross domestic product report from the Commerce
Department today. The U.S. economy expanded an annualized 2.7 percent,
faster than preliminary data showing 1.9 percent growth.
Resistance 3: Y111.80 Resistance 2: Y110.70
Resistance 1: Y110.00
Current price: Y109.24
Support 1: Y108.70
Support 2: Y107.70 Support 3: Y106.60
Comments: Support
comes at Y108.70 (yesterday’s low). Break under this level will open
the door to channel support line from Aug 15 at Y107.70. Strong support
is around channel line from Jul 16 on Y106.60. Strong resistance is
near channel line on Y110.00, further – at Y110.70 (Aug 15 highs). Key
resistance comes at 2008 highs around Y111.80/90.
Resistance 3: Chf1.1260
Resistance 2: Chf1.1100 Resistance 1: Chf1.1020
Current price: Chf0.0923
Support 1: Chf1.0900 Support 2: Chf1.0880 Support 3: Chf1.0820
Comments: Dollar almost erased yesterday’s rally, spurred after
stronger-than-expected Durable goods orders. Today the revised 2Q GDP
figure is due to come at 12:30 GMT with economists predict US economy
grew 2.7% in the second quartet after +1.9% previously. In general,
USD/CHF holds within the upward channel from Jul 16, limited today by
Chf1.0880/Chf1.1260 (key support/resistance respectively). Support is
around Chf1.0900 (yesterday’s low). Below correction may widen to
channel support line on Chf1.0880 with a break under accelerates to
last week’s lows on Chf1.0820. Minor resistance comes at session highs
near Chf1.1020/25 with stronger – on trend resistance line from Mar at
Chf1.1090/00. Above key resistance comes at Chf1.1260 (the upper bound
of the channel from Jul 16).
Resistance 3: $1.8580
Resistance 2: $1.8500 Resistance 1: $1.8400
Current price: $1.8327
Support 1: $1.8320 Support 2: $1.8280 Support 3: $1.8160
Comments: Strong support comes near session low on $1.8320 with a
break under will drag the pound down to yesterday’s low on $1.8280,
further – to Jul 2006 lows around $1.8160/70. Resistance is around $1.8400
(23.6% Fibo of $1.8800 to $1.8280 decline). Break above will bring the
rate to yesterday’s highs on $1.8490/00 and then – to Monday’s highs at
$1.8580/90.
Resistance 3:$1.4960
Resistance 2: $1.4900
Resistance 1: $1.4800
Current price: $1.4765
Support 1: $1.4700
Support 2: $1.4620 Support 3: $1.4560
Comments: EUR/USD strengthens Thursday after yesterday's sell-off. Rate
rises ahead of the labor market data release from the largest EU
economy – Germany. Analysts predict unemployment fell in August.
Resistance comes around $1.4800 (Monday’s high), with a break above
will let the rate to challenge $1.4900/10 (Aug 21 high and 23.6% Fibo
of $1.6030 - $1.4560 decline). Key resistance is near channel line from
Jul 22 at $1.4950/60. Support comes at $1.4700/10 (session low). Under
there is a chance to test $1.4615/20 and Tuesday’s lows on $1.4560/70.
AUS/USD holds at $0.8655 with
traders mention stops through $0.8650 as Aussie continues to ease back. Fresh
bids were reported in the overnight session at $0.8620/30.
The euro rose against the dollar for
a second day on speculation the region's interest-rate advantage over the U.S.
will draw investors after a European Central Bank official signaled a cut in
borrowing costs is unlikely.
The euro approached a record high
against the British pound after ECB council member Axel Weber said yesterday
that rates may have to rise as the economy recovers.
The U.S. dollar fell for a second
day against the yen as oil climbed, threatening growth in the largest energy
consumer. The Australian dollar gained after a government report showed
second-quarter business investment increased by almost three times as much as
forecast.
EUR/USD has got close to $1.4800
before it retreated to $1.4760.
GBP/USD was kept within the $1.8340/00
range.
USD/JPY fell from Y109.60 to Y108.70.
In Europe UK CBI retail sales report
is due to come with analysts predict sales fell 36% in Aug after -33% in July.In US focus will be on revised 2Q GDP
data. Economists expect economy rose 2.7% q/q after previously released 1.9%.
Japan's benchmark stock indices ended Thursday's session very narrowly mixed, off of early session lows. The benchmark Nikkei 225 was higher by 15.29 points, or 0.12%, at 12768.25. The broader-based TOPIX was modestly lower, down 4.16 points at 1219.53.
Japan's stocks declined for a second day after
developer Sohken Homes Co. filed for bankruptcy, sparking concern consumers are
holding back on purchases as the economy slows.
Sumitomo
Realty & Development Co. slumped 2.9% while Sohken tumbled by its daily
limit. Nissan Motor Co. dropped 4.7% after Morgan Stanley cut its price target.
Nippon Paper Group Inc. led a gauge of papermakers to the biggest gain in three
weeks as investors flocked to companies whose earnings are relatively resilient
against an economic slowdown.
Bankruptcies
among Japanese property companies more than doubled to 60 in July from a year
earlier, according to Tokyo Shoko Research Ltd. Monthly wages in Japan
rose in June at the slowest pace since November, the Labor Ministry said on
Aug. 18. Meanwhile, consumer-price inflation in July probably surpassed 2% for
the first time in a decade, according to the median estimate of 37 economists.
Toyota
Motor Corp. lost 2.7% and Honda Motor Co. slid 2.2%.
Nippon
Paper surged 5.1%, leading the Topix Pulp & Paper Index to the biggest
advance since Aug. 5. Oji Paper Co. jumped 3.7%. Drugmaker Eisai Co. leapt 4%,
while rival Astellas Pharma Inc. climbed 1.7%.
European stocks advanced for a
second day after a report showed orders for U.S. durable goods unexpectedly
increased in July and higher commodity prices boosted the profit outlooks for
energy and metal producers.
ABB Ltd.,
the world's largest builder of power networks, jumped 2.8%, and BAE Systems
Plc, Europe's biggest defense contractor,
climbed 3.6%. BP Plc rose 1.8% as oil rallied for a third day, while BHP
Billiton Ltd. increased 1.3% as copper, lead and nickel gained.
Stocks
fell earlier today as concern deepened bank losses will spread, while European
Central Bank council member Axel Weber damped speculation borrowing costs may
ease. Weber said there's no scope for interest-rate cuts and the bank may even
need to raise borrowing costs again once the economy emerges from its slump.
The ECB raised its benchmark rate by a quarter point to 4.25% in July.
Meanwhile,
Baloise Holding AG, Switzerland's
third-biggest insurer, fell 7.9%. Profit dropped 42% in the first half to 268.2
million Swiss francs ($244.9 million) after income from its life business and
investments fell. That missed analysts' estimates.
Scor SE
climbed 1.6%. France's
biggest reinsurer said first-half net income rose 24% to 225 million euros,
surpassing analysts' estimates, as it used deferred tax assets to offset costs
related to the acquisition of Switzerland's
Converium Holding AG.
Stocks closed mixed Wednesday as
investors saw a surprisingly strong reading on durable goods.
Orders for
big-ticket manufactured goods jumped for a second straight month, the
government reported Wednesday. Orders rose 1.3% in July, easily outpacing the
0.1% gain economists were expecting, on average. The rise was in line with the
upwardly revised 1.3% increase reported in June.
While the
strong durables report was a positive, investors remained concerned about the
spike in oil prices as Tropical Storm Gustav neared the Gulf of Mexico and U.S. oil
facilities.
The euro rose from a six-month low
versus the dollar as European Central Bank council member Axel Weber said
discussion about a reduction in interest rates is ``premature'' and crude oil
prices increased for a third day.
The currency also advanced on
speculation its largest monthly decline against the greenback since its 1999
debut was too big to sustain. The dollar gained versus the yen as orders for U.S. durable
goods unexpectedly rose last month.
The Dollar Index dropped even as the
Commerce Department reported that bookings for U.S. goods made to last several
years increased 1.3% in July after a revised gain of the same amount in the
previous month. The median forecast of economists was for no change in durable
goods orders.
The euro has fallen 8% from a record
of $1.6038 set on July 15 as the European economy shrank in the second quarter
and crude oil declined 20% from its all-time high reached last month. The
currency has dropped 5.8% against the dollar in August, the biggest monthly
decline since the European currency began trading.
EUR/USD printed high on $1.4770 before
falling to $1.4660 after strong US
data. Later rate rebounded to $1.4740. GBP/USD failed to break above $1.8500,
spurring the position-adjustment. Rate fell to $1.8280 before recovering to $1.8360. USD/JPY rose from Y108.70 to Y109.90.
In Europe UK CBI retail sales report
is due to come with analysts predict sales fell 36% in Aug after -33% in July.In US focus will be on revised 2Q GDP
data. Economists expect economy rose 2.7% q/q after previously released 1.9%.
Resistance 3: Y111.80 Resistance 2: Y110.70 Resistance 1: Y110.00 Current price: Y109.00 Support 1: Y108.70 Support 2: Y107.70 Support 3: Y106.60 Comments: USD/JPY weakens ahead of Japan Friday’s CPI report. Support comes at Y108.70 (yesterday’s low). Break under this level will open the door to channel support line from Aug 15 at Y107.70. Strong support is around channel line from Jul 16 on Y106.60. Strong resistance is near channel line on Y110.00, further – at Y110.70 (Aug 15 highs). Key resistance comes at 2008 highs around Y111.80/90.
Resistance 3: $1.8580 Resistance 2: $1.8500 Resistance 1: $1.8400 Current price: $1.8356 Support 1: $1.8320 Support 2: $1.8280 Support 3: $1.8160 Comments: GBP/USD’s rebound is quite slow Thursday amid speculation that today’s UK Nationwide house price report will show the 1.5% decline in Aug after -1.7% month earlier. It may fuel expectations BOE will cut rates as the economy weakens. Resistance is around $1.8400 (23.6% Fibo of $1.8800 to $1.8280 decline). Break above will bring the rate to yesterday’s highs on $1.8490/00 and then – to Monday’s highs at $1.8580/90. Strong support comes near session low on $1.8320 with a break under will drag the pound down to yesterday’s low on $1.8280, further – to Jul 2006 lows around $1.8160/70.
28.08 07:02
UK: Nationwide UK House Price Survey for August -1.9% m/m, -10.5% y/y
Resistance 3:$1.4960 Resistance 2: $1.4900 Resistance 1: $1.4800 Current price: $1.4790 Support 1: $1.4700 Support 2: $1.4620 Support 3: $1.4560 Comments: EUR/USD strengthens Thursday after yesterday's sell-off. Rate rises ahead of the labor market data release from the largest EU economy – Germany. Analysts predict unemployment fell in August. Resistance comes around $1.4800 (Monday’s high), with a break above will let the rate to challenge $1.4900/10 (Aug 21 high and 23.6% Fibo of $1.6030 - $1.4560 decline). Key resistance is near channel line from Jul 22 at $1.4950/60. Support comes at $1.4700/10 (session low). Under there is a chance to test $1.4615/20 and Tuesday’s lows on $1.4560/70.
