12/12/08

FTSE 100	4388.69, +21.41	Dow	8565.09, -196.33
FTSE 250	6320.39, +56.02	Nasdaq	1507.88, -57.6
FTSE All Share	2186.58, +11.15	S&P 500	873.59, -25.85
Nikkei	8235.87, -484.63	Hang Seng	14758.39, -855.61
Oil (Crude)	$47.98	Gold	$826.60
Base Rate	2%	10 Yr Gilt	3.54%
£/$	1.489	Euro/Gbp	0.893

Markets

markets dropped yesterday following another spate of weak economic data and concerns that the $14 billion auto bailout will not be passed by the Senate. The number of Americans filing new claims for unemployment benefits reached a 26 year high of 573,000, a bigger than expected rise of 58,000 from the previous week.

The Dow Jones lost 196.33 points to close at 8,565.09, the S&P 500 fell 25.65 points to end at 873.59. The Nasdaq dropped 57.60 points to finish at 1,507.88.

General Motors and Ford Motor Co tumbled on fears that Republican opposition will prevent the bailout package being passed by the Senate. The House of Representatives passed the bill on Wednesday night with 237 votes to 170, but the vote now passes to the Senate, where strong Republican opposition could prevent the rescue package going through. GM slumped 10.4% while Ford dropped 10.8%.

Financials suffered following comments from JPMorgan's chief executive, Jamie Dimon, who told CNBC that the year end environment was "terrible". The stock had already been suffering after UBS cut its price target and earnings estimate earlier in the session. It caused the biggest weight on the Dow, falling over 10% and helped the S&P financial sector index to a 8.5% loss. In contrast, Bank of America added 2.5% after announcing plans to cut 30-35,000 jobs over the next three years.

Energy stocks helped to limit losses after a report from the International Energy Agency which forecast that global oil demand will rebound next year. Chevron Corp gave the Dow its biggest lift, rising 1.3%.

US light crude oil for January delivery climbed $17.80 to $47.98 a barrel. COMEX gold for February delivery rose $17.80 to $826.60 an ounce. Treasury prices edged lower, raising the yield on the 10 year note to 2.7% from 2.68%.

The Nikkei plunged 484.63 points to close at 8,235.87 this morning on news that the US Senate failed to agree on the auto-industry bailout and the yen surged to a 13 year low. Toyota Motor Corp, which gets half its profit in North America, sank 10% as disagreements over wages for union workers derailed a compromise among Senators.

The Hang Seng sank 855.61 points to 14,758.39 this morning on concerns a global recession will deepen following the collapse of the auto bailout and China's retail sales grew at the slowest pace in nine months. Li & Fung Ltd slumped 13% after a US customer filed for bankruptcy, owing the Hong Kong based company $27.2 million.

The FTSE 100 is currently 121.37 points lower at 4,267.32. HBOS is one of the biggest fallers, down 11% after reporting £5 billion of charges as credit conditions worsened in the last two months. Lloyds, which has agreed to takeover HBOS, is off almost 17%

Economics

PPI (Nov) 13.30 gmt
A 2.6 percent decline in headline PPI, with the year on year rate dropping to 0 percent, down from 5.2 percent in October. Energy prices fell for the fourth consecutive month in November, with oil prices down 20 percent and gasoline prices tumbling by 30 percent. Finished food prices should fall for the second month in a row, as farmer food prices continue to drop. For the core PPI, a rise of 0.1 percent on the month, with the year on year rate falling to 4.1 percent from 4.4 percent. The core PPI ex-autos has been elevated (4.8 percent year on year in October), but the latest Beige Book indicated that selling prices have leveled off as input prices have declined. US Retail sales (Nov) 13.30 gmt
Another weak report in November is expected. The picture from chain stores stayed the same this month, with broadly disappointing reports from department store and apparel retailers, while Wal-Mart sales were better than anticipated. Auto sales fell further to 10.2m annualised from 1.5m, and retail motor vehicles are seen falling 2.5 percent. Gasoline prices should fall by 11 percent or more. Overall, total November sales are expected to be down 2 percent on the month, ex-auto sales down 1.9 percent and ex-auto/gasoline sales down 0.5 percent.

US University of Michigan confidence (Dec, prelim) 15.00 gmt
Recent confidence indicators have been mixed. The consumer expectations component of the Conference Board survey rose 11 points in November, but the ABC consumer comfort survey has declined to new lows, dropping to -54 last week. Gasoline prices have fallen further, but job losses and the overall economic slowdown in economic should continue to weigh on confidence. Michigan sentiment to stay at around the 55 level.

US Business inventories (Oct) 15.00 gmt
Manufacturing inventories fell 0.6 percent in October. Assuming modest increases of 0.1 percent for wholesale inventories and 0.2 percent for retail inventories, total business inventories could fall by 0.1 percent.

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