12/5/08

The Dow Jones dropped 120.9 points to close at 12,745.9, the S&P 500 fell 9.4 points to end at 1,388.3. The Nasdaq finished 5.7 points lower at 2,455.5.

AIG released its quarterly figures late Thursday and not only was their quarterly loss greater than expected, they also announced that they are looking to raise $12.5 billion in capital to boost its balance sheet. The news revived worries that the end of the credit crisis was not so near, sending shares almost 9% lower.

Another big financial helping to send the market lower was Citigroup. The company said on Friday that it intends to sell off around $400 billion in assets over the next two to three years, in an effort to become more competitive. Shares slipped 2.8% as a result.

The Nasdaq, which fell less than the other two major indices, was kept in check by video game maker Activision. The company reported earnings that jumped from a year ago topping estimates. Shares rallied 14.2%. Furthermore, graphics company Nvidia gained 2.6% following a broker upgrade from Stifel Nicolaus.

US light crude oil for June delivery closed at a new record of $125.96 per barrel, having earlier hit an intra day record of $126.20. COMEX gold for June delivery rose $3.70 to $885.80 an ounce.

Treasury price rose, lowering the yield on the 10 year note to 3.77% from 3.78%.

The Nikkei gained 88 points to close at 13,743.4 this morning. The first advance in three days for the index came as rising oil prices prompted investors to snap up companies supported by domestic demand. Japan Tobacco climbed the most in a month, while Takeda Pharmaceuticals had its biggest rise in two weeks. Konica Minolta Holdings Inc surged the most in seven years after forecasting higher profit.

The Hong Kong Stock Exchange is closed today.

London's blue-chip stocks shed more than 1% on Friday after soaring oil prices and losses for heavyweight sectors undermined trading. Banks and mining stocks featured on the fallers board as the FTSE 100 Index closed 66.1 points lower at 6204.7, with a tough start on Wall Street adding to the pressure. Market nerves were frayed by oil prices reaching yet another new record above $126 a barrel, while trade figures added to concerns over the US economy - sending the Dow Jones Industrial Average 1% lower early on.

Carphone Warehouse was the session's worst performer, down more than 7% as investors expressed disappointment with yesterday's announcement of a £1.1bn deal with US consumer electronics group Best Buy. A sell recommendation from Citigroup in the wake of the retailer's plans to create a European consumer electronics empire sealed the group's share prices woes, with the firm dropping 21p to 268p. Banks joined Carphone Warehouse on the back foot as the Footsie mirrored falls for Europe's major indices and shipped some of the steady gains seen over the past days. A downgrade for Barclays by broker Pali International sent the high-street banking giant into the red, down 11.5p to 451.5p. Its rivals also suffered, with Royal Bank of Scotland off 10.5p at 347p, Halifax Bank of Scotland down 8.5p at 505p and Lloyds TSB shedding 10.75p to 433p.

Miners were in negative territory as Kazakhmys fell nearly 7% to 1786p after revealing it had rejected an approach from Kazakh rival Eurasian Natural Resources, which was 19p better at 1307p. Elsewhere in the sector, Antofagasta was off 32.5p at 777p and Vedanta Resources down 97p at 2400p. Nuclear power provider British Energy was also a loser as speculation swirled over the group's takeover saga. The group's shares shed 14p to 701p amid a flurry of reports over which suitors were left in the race for the firm and talk that bids were being prepared at the lower end of market hopes.

With oil trading at fresh records meanwhile, British Airways was a casualty. The airline dropped 10.25p to 228.25p as investors braced themselves for more fuel hikes. Among the Footsie risers, supermarkets fared better, with Morrisons up 2p at 290p after JP Morgan raised its price target and said the group had more operational momentum than its peers. Rival Sainsbury's was 3.5p better at 398.75p. Another late gainer was leisure and pubs group Whitbread, up 23p to 1395p after entrepreneur Robert Tchenguiz emerged with a 3% stake in the firm. In the second tier, entertainment retailer HMV went into reverse after initial gains following an upbeat trading statement. Shares were down nearly 6%, or 8.5p, at 140.75p.

Economics
US Housing starts (Apr) 13.30 bst

Housing starts and building permits have each fallen 59 percent from their respective peaks in late 2005 and early 2006. The pace of new home sales has declined by 62 percent over a similar period, so that the actual number of new homes for sale is down 18 percent only from its July 2006 peak. This may mean that homebuilders continue to slow new construction in the near term. The latest NAHB survey showed a glimmer of positive news, as builders were a bit less pessimistic about future sales.

US University of Michigan confidence (May, prelim) 15.00 bst

HSBC think Michigan sentiment is expected to decline further, dropping to 61 from 82.6 in April. The ABC/Washington Post survey has fallen to new lows in recent weeks, while gasoline prices have continue to rise sharply. Meanwhile, labour market concerns and uncertainty are negatively impacting consumers assessment of buying conditions. Inflation expectations increased in last months survey with the 1 year median rising to 4.8 percent from 4.3 percent and the 5 year median rising to 3.2 percent from 2.9 percent.