24/12/08

The Dow Jones fell 100.28 points to close at 8,419.49, the S&P 500 slipped 8.47 points to end at 863.16. The Nasdaq lost 10.81 points to finish at 1,521.54.

General Motors and Ford Motor Co both tumbled around 15% after their debt was cut deeper into junk territory. The downgrades reflect unease over effects on debt holders of the $13.4 billion US aid plan for GM and Chrysler LLC.

Bank of America and Citigroup Inc lost 5.7% and 3.5% respectively as the continued collapse in the housing market added to concern mortgage defaults will increase.

Credit card company turned commercial bank, AmEx, said it has received preliminary approval for a $3.9 billion government bailout package. Although shares still finished 2.5% lower.

US light crude oil for February delivery slid $0.93 to $38.98 a barrel. COMEX gold for February delivery slipped $9.10 to $838.10 an ounce. Treasury prices edged lower, raising the yield on the 10 year note to 2.16% from 2.14%.

The Nikkei dropped 206.68 points to end at 8,517.10 this morning. Toyota Motor Corp continued to fall following its own projection of a first operating loss for 71 years. Nippon Telegraph & Telephone Corp sank 6.8% ahead of a trading suspension of its shares resulting from the Tokyo bourse's switch to a paperless stock system.

The Hang Seng slipped 36.65 points to close at 14,184.14 this morning, its fourth consecutive loss. China Shipping Development Co, whose vessels carry oil, coal and manufactured goods, lost 4% as an index measuring the cost of transporting commodities dropped. PetroChina Co led oil producers lower after oil prices slumped.

The FTSE 100 is currently 41.41 points lower at 4,214.57. BT is top of the faller’s board after going ex-div, sending the stock 6% lower. AstraZeneca loses 2% after reports that the FDA is seeking additional information on its application for a drug that treats schizophrenia. BP and Royal Dutch Shell are around 1% lower as oil continued to fall.

Economics
US Personal income and spending (Nov) 13.30 gmt

November personal income growth could be flat, as the 0.9 percent drop in aggregate hours worked offset the 0.4 percent rise in average hourly earnings. HSBC think nominal personal spending will fall 0.9 percent in November. However, all of this is likely to reflect a 0.9 percent drop in prices (owing to plunging gasoline prices), so November real PCE is expected to be flat. The core PCE deflator is expected to rise 0.04 percent (rounding down to flat), slightly higher than the 0.02 percent core CPI. The year on year rate should slow to 2 percent from 2.1 percent.

US Durable goods orders (Nov) 13.30 gmt

Boeing aircraft orders have slowed to a trickle, falling to 7 in November from 14 in October, even as production started to recover after the machinists strike ended on 1st November. The recent round of manufacturing surveys indicate falling demand, as the latest Empire new orders index was close to unchanged at -21. Overall durable goods orders are expected to trend lower, although the choppy monthly results suggest upswings at some point. After a 6.9 percent decline in October, total durable goods orders are expected to fall 2.6 percent. Ex-transport, orders could fall by 2.1 percent.

US Initial jobless claims (Week 20 Dec) 13.30 gmt

Last weeks initial claims showed a decline to 550,000 to 554,000. The four week average crept higher to 543,750 a 26 year high. 550,000 are expected this week. Continuing claims for the previous week could rise to 4.44m from 4.38m, hitting a new cycle high. Additionally, the number of people receiving emergency unemployment compensation (released with a two week lag) could rise further, up from the latest total of 934,000.