US light crude oil for February delivery slid $3.24 to settle at $37.59 a barrel. COMEX gold for February delivery dropped $34 to close at $821 an ounce. Treasury prices jumped, lowering the yield on the 10 year note to 2.3% from 2.4%.
The Nikkei slumped 422.89 points to close at 8,413.91 this morning. Media reports suggested that Sony Corp and Toshiba Corp will post losses stoking concerns that other companies will have disappointing earnings. Mitsubishi Estate sank 9.2% after more real estate companies filed for bankruptcy.
The Hang Seng lost 302.95 points to end at 13,668.05 this morning. Aluminium Corp led materials companies lower after Alcoa reported its disappointing quarterly figures.
The FTSE 100 is currently 51.17 points lower at 4,375.02. Rio Tinto leads the decline, down 6.3%, after saying it will delay work on a $371 million program to automate iron ore trains in Western Australia and suspended a copper mine expansion because of the global recession. Xstrata is 5.7% lower after announcing it will shutter its Handlebar Hill zinc and lead mine in Australia. Tesco tops the riser’s board, up 2.7%, after saying revenue growth accelerated over the Christmas period.
Economics
UK RICS house prices balance (Dec) 00.01 gmt
The latest BoE Credit Conditions Survey continues to tell a story of credit tightening. Survey results suggest household secured lending spreads increased greatly in the last quarter of 2008, demonstrating the unwillingness of lending institutions to pass on rate cuts in full. Mortgage approvals were a meagre 27,000 in November.
Still, this series reflects the prevalence of price rises and falls across the UK, and some of the regions have seen less dramatic falls than others. The series has stabilised over the last few months and we expect it to have edged up slightly further in December.
UK DCLG house prices (Nov) 09.30 gmt
The DCLG house price index is the last of the house price indices to be released so tends not to be as significant for the markets as the Nationwide or Halifax release. House prices on this measure are holding up significantly better than implied by the other indicators. This is because this index is value weighted and so is more heavily influenced by sales in London and of larger properties for which the price declines so far have as yet been minimal.
UK Trade balance (Nov) 09.30 gmt
Sterling has depreciated significantly on a broad based measure, and particularly against the euro. The hope is that higher export demand and import substitution will stimulate demand, but in an environment of collapsing world trade growth, exports are unlikely to be supported near term. The trade deficit has narrowed in recent months and a modest further improvement in November is expected as imports fall more sharply than exports.
US Trade balance (Nov) 13.30 gmt
The trade deficit in November probably narrowed to -USD53bn, from -USD57.2bn in October. Total imports are expected to have fallen by nearly USD11bn, primarily reflecting lower oil prices (petroleum import price fell 26 percent). Exports could fall by about 4bn. Export prices on goods declined 3.2 percent, and also expect falling volumes for the third straight month. The ISM export orders index has dropped sharply in recent months, to 41 in both October and November and down to 35.5 in December.
US IBD/TIPP economic optimism (Jan) 15.00 gmt
This confidence index has held up better than either the Conference Board or University of Michigan surveys. Even after falling 6 points to 45 in December, the series is still 8 points above the record low set in June last year, when gasoline prices were at their peak. With gasoline holding about steady in recent weeks, the January IBD/TIPP reading is expected to remain at 45. Excluding the federal policies components, a small rise to 50 is expected from 49.5.
US Monthly budget statement (Dec) 19.00 gmt
A budget deficit of -USD50bn in December 2008 is expected, compared with a surplus of
USD48.3bn in December 2007. Additional TARP capital injections in December totalled around USD26bn.
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