18/1/08

The Dow Jones tumbled 307 points to close at 12,159.2, the S&P 500 dropped 39.95 points to end at 1,333.25. The Nasdaq fell 47.69 points to finish at 2,346.9.

Merrill Lynch was hammered after reporting a near $10 billion quarterly loss and an $11.5 billion write down in relation to bad mortgage debts. Shares in the company plummeted 10.2% to $49.45.

Bond insurers were hit after ratings agency Moody's said it may cut its financial strength rating on Ambec Financial. Moody's cited weakness in its plan to raise cash considering the $5.4 billion losses it reported in its portfolio of mortgage debt insurance. Ambec was cut in half, losing 51.9% of its value to close at $6.24. Rival MBIA slid 31.2% to $9.22.

Losses were broad based with all 30 Dow components finishing lower. General Electric almost 4% down at $33.21 while AIG dropped 6.3% to $54.27.

Treasury prices rose, sending the yield on the 10 year note to 3.62% from 3.73% late Wednesday.

US light crude oil for February delivery slid $0.74 to $90.10 a barrel. COMEX gold edged $1.20 lower to $880.80 an ounce.

The Nikkei closed 77.8 points higher today at 13,861.3, reversing earlier losses on expectations the US government and Federal Reserve will intervene to support the economy and after the yen weakened against the dollar.

The Hang Seng is currently 125.9 points higher this morning at 25,240.9. Again rising on speculation that the US government will intervene, the index makes headway having earlier been 3.9% lower. Industrial and Commercial Bank of China Ltd climbed after saying last year's profit may have risen by more than 60%.

The London market endured a third day of losses as further fears over the US economy and credit crunch fall-out erased earlier gains. The FTSE 100 Index closed down 40.5 points at 5902.4, responding to big falls in early Wall Street trading. Trading cheer from the retail sector and strong rises from house building stocks had seen London's leading share index rise as much as 85.5 points at one stage.

News that brewing giant Scottish & Newcastle had entered into takeover talks with suitors Carlsberg and Heineken also failed to keep the Footsie out of the red, despite shares soaring 5% to 765p. Associated British Foods led the risers board, up 8% or 63p to 838p, after its retail clothing operation continued its strong run of growth over Christmas.

House builder Taylor Wimpey added 6% after rival Barratt Developments posted better-than-expected trading figures and said it continued to trade satisfactorily. Taylor Wimpey shares were 10.5p higher at 175.3p, while Barratt - recently relegated from the FTSE 100 Index - stood 36.25p up at 399p. Persimmon also gained, up 22p at 752p. Property firms joined in the recovery with British Land ahead 47.5p at 968p and Hammerson 21p stronger at 1044p, a rise of 2% after a Morgan Stanley upgrade.

Among other companies reporting, Home Retail Group pared back earlier gains to close down 2%, or 5p at 266.25p despite latest trading figures dampening fears over prospects in a tougher retail climate. It also said it expected profits to be towards the top end of expectations.

Lloyds TSB posted one of the biggest gains - up 11.25p to 405.5p - as it recovered losses from earlier in the week. On the fallers board, miners endured a difficult session after a tough session yesterday when fears over a global slowdown led doubts over commodity demand. Vedanta Resources led the decliners, off 125p at 1760p.

December and the Christmas period is the key period for retailers. If the results published by individual retailers are characteristic of the whole market, then volumes were reasonable but only because of sizeable discounting. Although the retailers aren't happy, weak consumer spending is required in 2008 to ensure inflation remains near the 2 percent target.

US University of Michigan confidence (Jan, prelim) 15.00 gmt

The economic components of IBD/TIPP optimism and the latest ABC/Washington Post confidence readings are marginally above their respective lows in November and early December. However, stocks have fallen and the gasoline prices has risen in early January. These factors, along with the December unemployment rate rising to 5 percent from 4.7 percent, suggest some downside risk to confidence. A decline to 74 is expected.

US Leading indicators (Dec) 15.00 gmt

December leading indicators are seen flat. Positive contributions from ISM supplier deliveries and real money supply growth should offset lower manufacturing hours worked and higher initial jobless claims.

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