16/03/10

FTSE 100	5593.85, -31.8	Dow	10642.15, +17.46
FTSE 250	9879.01, -62.55	Nasdaq	2362.21, -5.45
FTSE All Share	2862.58, -16.1	S&P 500	1150.51, +0.52
Nikkei	10721.71, -30.27	Hang Seng	21022.93, -56.17
Oil (Crude)	$79.80, -$1.44	Gold	$1105.40, +$3.70
Base Rate	0.5%	10 Yr Gilt	4.07%
£/$	1.504	Euro/Gbp	0.909

Markets

stocks were mixed yesterday, with the Dow and S&P 500 slightly higher while the Nasdaq finished lower. Financial stocks were in focus as investors weighed Moody's warning about the United States' AAA rating and comments from the Senate Banking Committee. Comments by Moodys that the United States and Britain are more likely to see a downgrade than rivals

Germany

and France initially soured investor sentiment. However, the ratings agency was quick to note that there is no imminent rating pressure for the United States or the other countries. Meanwhile, Christopher Dodd, of the Senate Banking Committee, released a proposed financial regulation overhaul bill, but analysts said it didn’t offer any surprises for the sector. The Dow Jones rose 17.46 points to 10,642.15, the S&P 500 added 0.52 points to 1,150.51 and the Nasdaq slipped 5.45 points to 2,632.21. Semiconductor related stocks dragged on the Nasdaq after analysts lowered their ratings on several chip stocks. Lam Research dropped 4.6 percent to $32.68, KLA-Tencor fell 4.6 percent to $28.09 and Atheros declined 4.1 percent to $35.69.

The Nikkei fell 30.27 points to 10,721.71 this morning. Stocks went lower for the first time in four days ahead of the Bank of Japan’s decision on monetary-easing and before the US Federal Reserve announces its rate policy. Exporters dropped as the yen strengthened. The Hang Seng lost 56.17 points to 21,022.93 today. Developers led the index lower after the city’s government said it would release apartments on to the market to cool property prices.

The FTSE 100 fell 31.80 points to 5,593.85 yesterday. Mining companies led the market lower as copper slumped to a two week low. This morning the index rebounds, rising 34.79 points to 5,628.64. Miners receive some support from metal prices which were slightly firmer. More banks are willing to lend to real estate development in the UK again, ending a two-year hiatus that forced developers to shelf projects due to lack of financing, property consultant Savills said on Tuesday.

Economics

UK DCLG house prices (Jan) 09:30 GMT

The DCLG (formerly ODPM) house price index is the last of the house price indices to be released for the month of January; in fact, both the Nationwide and Halifax have already published February estimates, so this index tends not to be as significant for the markets. With the fall in house prices in the Nationwide and Halifax measures for February, analysts expect house prices to make moderate gains in the DCLG measure for January.

US Import price index (Feb) 12:30 GMT/ 08:30 EDT

Both import and export prices have been trending higher since the early part of 2009. Nonpetroleum import prices are up 3.4% y-o-y. Analysts look for February import prices to rise by 0.1%, with lower oil prices offsetting an estimated 0.4% increase in non-petroleum prices.

US Housing starts (Feb) 12:30 GMT/ 08:30 EDT

Housing starts have shown some modest improvement in recent months, presumably reflecting progress in reducing the inventory of unsold, completed new homes rather than any major upgrade to the outlook for new home sales per se. Indeed, new-home sales have actually fallen short of expectations for four months in a row, and those disappointments should soon begin to weigh on construction activity. The biggest single influence on the February housing start data, however, is likely to be the poor weather of that month. The Northeast and Midwest– which together typically account for a quarter to a third of total housing starts – were the worst affected, but weather also proved unusually poor in the South (roughly 60% of starts) and some impact on construction activity has to be expected. Overall, analysts look for a combination of fundamental and weather effects to produce a fall in housing starts towards the 550,000 level in February.

US FOMC rate announcement 18:15 GMT/ 14:15 EDT

Analysts expect few substantive changes to be made to the FOMC’s statement and look for a reiteration of the commitment to maintain the current ultra-loose monetary conditions for an extended period. The trajectory of the economy has largely followed expectations since the January FOMC meeting, with the slight upside surprises relating to manufacturing balanced by disappointing housing data, while conditions in the labour market are still more akin to a reduction in job shedding than outright employment creation. The payroll disruption caused by the February storms, meanwhile, does not appear big enough to warrant a specific reference. The more pertinent issue relates to the use of the ‘extended period’ terminology, which has proved to be an area of discord across the Committee for a number of months now, as evidenced by the decision of Thomas Hoenig to dissent over this issue at the January meeting. Despite such opposition, the terminology nevertheless featured in the communication that accompanied the discount rate hike on 18 February, as well as Bernanke’s monetary policy testimony just a week later, and analysts look for it to feature once again in this statement. This may yet, however, prove to be one of the final appearances for the extended-period wording. Analysts believe the January FOMC statement marked the adoption of a more activist approach by the Committee with regard to the degree of guidance provided on the outlook for policy, perhaps motivated by the desire to avoid the ‘cut and paste’ approach employed back in 2003/4. The other major factor to watch for in this statement surrounds the MBS purchase program. Scheduled to finish at the end of this month, the Committee may retain some flexibility to make further purchases should conditions warrant over the coming months.

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