1/5/08

The Dow Jones slipped 11.8 points to close at 12,820.1, the S&P 500 fell 5.35 points to end at 1,385.6. The Nasdaq edged 1.7 points to finish at 2,426.1.

In corporate news, Citigroup slumped 4% after announcing that it would boost the size of its common stock offering from $3 billion to $4.5 billion.

Procter & Gamble reported improved quarterly earnings that topped estimates and increased its full year forecast. Shares climbed 1.8% higher.

General Motors reported a greater quarterly loss than last year, but it was still better than what analysts had expected. Sales also beat forecasts to send shares 9.4% higher.

US light crude for June delivery dropped $2.17 to $113.46 a barrel. COMEX gold for June delivery lost $11.70 to close at $865.10 an ounce.

Treasury prices finished higher, lowering the yield on the 10 year note to 3.73% from 3.82%.

The Nikkei fell 83.13 points to 13,766.86 this morning. Stocks went lower after the central bank lowered its growth forecast, and as companies including Kirin Holdings Co delivered disappointing earnings. Sumitomo Trust & Banking Co, the nation's largest trust bank by value, sent banks lower on concern they won't be able to raise lending rates after the Bank of Japan indicated it may not lift its interest benchmark this year.

The Hong Kong Stock Exchange is closed today.

Losses in the mining and banking sectors held back progress on the London market yesterday despite a late session rally on better than expected economic news in the US. Figures showing that America's GDP growth stood at a more robust than feared 0.6% during the first quarter had helped the FTSE 100 Index reverse a 30 point loss earlier this afternoon. But otherwise subdued trading ahead of the Federal Reserve's decision on US interest rates later in the day saw the gains pared back to leave the Footsie 2.1 points down at 6087.3.

Downgrades for Vedanta Resources and Halifax Bank of Scotland spread gloom through their respective sectors and saw them and rival firms dominate the fallers board. The performance offset better news from the high street in the shape of steady Argos sales and continued growth for satellite broadcaster British Sky Broadcasting.

Miners accounted for three of the four top Footsie fallers, with Vedanta Resources the chief casualty after falling from favour with Merrill Lynch analysts. It closed 105p lower to 2245p. Kazakhmys was next in line - off 66p at 1582p - while fellow Kazakh miner Eurasian Natural Resources fell 47p to 1200p.

Among banking stocks, Britain's biggest mortgage lender HBOS slipped 16.25p to 470.5p after Citigroup cut its target price on the stock following the £4 billion right issue announced yesterday. Royal Bank of Scotland and Barclays were fellow fallers, off 5.75p to 345p and 3.5p to 456.5p respectively, although HSBC bucked the trend after positive noises from Goldman Sachs sent it 8.5p higher to 879.5p.

Oil and gas explorer BG Group surrendered some of the gains seen on the back of results from Shell and BP, despite £1.4bn delivered in first-quarter profits. Investors were wary after BG announced a £6bn offer for Australian energy supplier Origin Energy, leaving shares 77p lower at 1231p.

Of all the UK indicators, manufacturing sentiment and output should remain more robust given the sharp decline in sterling over the past nine months. If indicators of manufacturing also weaken, the MPC will become less confident that we'll see a rebalancing in the composition of growth and more concerned with the prospect of UK growth slowing sharply this year.

US Initial jobless claims (week 26 April) 13.30 bst

Last week's jobless claims fell to 342,000 from 375,000, with the 4 week average edging down to 369,500. Jobless claims are expected to be 355,000 this week, with the 4 weeks average likely to fall further. Continuing claims for the previous week should climb to 2.97m.

US Personal income and spending (Mar) 13.30 bst

Personal income and spending should each rise 0.3 percent in March. However, the increase in consumption is likely to solely reflect higher prices, with gasoline price pushing the deadline PCE index up 0.3 percent. Real PCE in March therefore should be flat. Meanwhile, the core PCE deflator is seen rising 0.12 percent, a bit lower than the core CPI increase of 0.15 percent and likely to round down to 0.1 percent. The year on year rate should remain at 2 percent.

US ISM Manufacturing (Apr) 15.00 bst

So far in April, we have received conflicting signals from regional surveys. The Philadelphia Fed was surprisingly weak at -24.9, suggesting about 46 for ISM. However, the Empire Index was slightly positive for the first time in three months at 0.6. This reading suggests about 50 for ISM. Overall, HSBC give the Philadelphia survey more weight, and they expect ISM manufacturing to slip to 47.

US Construction spending (Mar) 15.00 bst

Residential construction spending continues to decline, as housing starts and completions are still falling. Meanwhile, non residential spending has also declined over the past three months. Total spending is seen falling 0.4 percent in March, with a 1 percent drop in residential construction.