15/1/09

The Dow Jones fell 248.42 points to end at 8,200.14, the S&P 500 dropped 29.17 points to close at 842.62. The Nasdaq lost 56.82 points to finish at 1,489.64.

Citigroup plummeted 23% as analysts speculated as to whether the sale of Smith Barney to Morgan Stanley for $2.7 billion is the start of a break up of the whole company. The investment bank has now brought forward its quarterly results from next week to this Friday. Bank of America Corp fell 6% after the bell following a report from The Wall Street Journal. It said the US government is close to extending more aid to the troubled bank, highlighting the strain that it is under. Banks had started on the back foot following news from Europe, where Morgan Stanley said that HSBC is likely to halve its dividend, while Deutsche Bank reported a loss of more than $6 billion in the last quarter.

Apple plunged almost 10% in extended trade following news that CEO Steve Jobs is taking medical leave as his health problems are "more complex" than he thought.

Exxon Mobil and Chevron Corp caused two of the biggest drags on the Dow as rising oil inventories and falling demand pushed oil lower. US light crude oil for February delivery slid $0.50 to $37.28 a barrel. Exxon dropped 3.6% while Chevron slid 3%.

COMEX gold for February delivery declined $11.90 to $808.80 an ounce. Treasury prices jumped, lowering the yield on the 10 year note to 2.2% from 2.29%.

The Nikkei slumped 415.14 points to close at 8,023.31 this morning. Advantest Corp, the world's biggest maker of memory chip testers, dived 9.8% after the nation's machinery orders in November plunged twice as much as expected.

The Hang Seng fell 461.65 points to close 13,242.96 points today on concern slowing demand is deepening the global economic slump. Yue Yuen Industrial (Holdings) Ltd, the biggest supplier of athletic shoes to Nike and Adidas lost 3.9% after the drop in US retail sales.

The FTSE is currently 70.69 points lower at 4,109.95. Home Retail tops the fallers, down 7.5%, to a six-week low after Britain's biggest household goods retailer reports a steep deterioration in gross profit margins. HSBC continues to slide following the report from Morgan Stanley, shares are currently down 4.5%. Standard Chartered tops the risers board, rebounding from yesterdays losses following news that Mervyn Davies had stepped down as chairman of the Asia-focused bank.

Economics
US PPI (Dec) 13.30 gmt

Headline PPI is set to fall by more than 2 percent for the third straight month in December. The gasoline PPI probably fell around 23 percent, as total finished energy goods prices are expected to fall 13 percent. Finished food prices could also decline for the second time in the past three months, after a flat reading in November. Assuming a 2.5 percent fall in headline PPI, the year on year rate should drop sharply into negative territory, from 0.4 percent down to -1.7 percent. For the core PPI, a flat reading is expected, taking the year on year rate to 4.1 percent from 4.2 percent. The price components of the ISM and regional manufacturing surveys have fallen sharply, suggesting that disinflationary pressures are not limited to just food and energy.

US Initial jobless claims (WEEK 10 Jan) 13.30 gmt

Initial claims have fallen unexpectedly for the past two weeks, falling to 467,000 in last week's release. Some of the decline may involve seasonal adjustment issues, but the underlying trend has probably declined below the 550,000 and above readings in December, which were boosted by extended auto production shutdowns. Initial claims are expected be at 550,000 this week. Continuing claims for the previous week could rise slightly to 4.62m up from 4.61m.

US Empire manufacturing (Jan) 13.30 gmt

December's ISM manufacturing was exceptionally poor, with the new orders index falling to the lowest level on record (going back to 1948), and zero out of eighteen manufacturing categories reporting growth. The Empire index for January is almost certain to stay deeply negative, but a small bounce is possible. The new orders series has been near its all time low at around -21 for the past three months and could rise by a few points. Shipments and employment respectively increased to -9 and -23 in December and may stay at around these levels. The headline index is expected to rise by 3 points up to -23. Meanwhile, price signals in the ISM and regional surveys are likely to get some extra attention after the 16th December FOMC minutes noted "survey evidence" of firms expecting lower prices. Empire prices paid (-7.5 in December) and prices received (-11.7 in December) are likely to fall further this month.

US Philadelphia Fed (Jan) 15.00 gmt

December's -32.9 for the Philadelphia Fed was actually the highest in three months, after averaging -38.2 in October and November. New orders improved about 6 points to -25.2, but shipments fell 10 points to -28.7. The January survey is expected to remain very poor, with the headline index dropping to -35. Prices paid (25.5 in December) and prices received (-32.8 in December) are near their all time record lows and are likely to stay deep in negative territory.