27/09/07

Stocks climbed in the morning after GM and its union reached an agreement deal. Most of GM's 80 plants were back in operation by the afternoon. GM shares jumped 9.4 percent and also lifted shares of Ford Motor. The GM news started the market off on a good note, and the stock advance accelerated on late afternoon reports about Bear Stearns. The New York Times reported on its Web site Wednesday afternoon that Bear Stearns is in serious talks with a number of outside investors about selling as much as 20 percent of the firm, adding credence to earlier market rumours. In addition to Warren Buffet, other potential suitors mentioned included Bank of America and Wachovia, the paper said. Bear Stearn stock gained nearly 8 percent. The stock has been battered this year as the company suffered big hedge fund losses in the wake of the financial market crisis.

In economic news, the government released its August durable goods orders report. Orders fell 4.9 percent in the month after rising 6.1 percent in the previous month. Economists through orders would fall to 3.5 percent.

Oil prices rose in the afternoon, erasing morning losses. US light crude for November delivery rose 77 cents to close at $80.30 a barrel on NYMEX. Prices had fallen in the morning after a government report showed weekly crude supplies showed a surprise rise.

Treasury prices ended the session flat after bouncing throughout the day. The yield on the 10 year note stood at 4.62 perent, unchanged from late Tuesday.

In currency trading, the dollar fell to another record low versus the euro before bouncing back a bit, and also gained versus the yen.

COMEX gold for December delivery fell $3.30 to settle $735.50 an ounce.

The Nikkei average closed 396.5 points higher at 16832.2 today to end at a 6 week closing high as investors, encouraged by gains on Wall Street, bought recent poor performers while Hitachi Ltd surged on a possible unit sales. Amid easing concern about fallout from subprime problems, bank and brokerage firms rang up hefty gains while shares in consumer finance firms lured buyers looking for bargains. Mitsui Fudosan and other property stocks gained ground after a Deutsche Securities upgrade.

UK stocks closed 36.1 points higher at 6433 on Wednesday, as banking stocks buoyed the market, led by Northern Rock and helped by data from the Bank of England. Northern Rock climbed 11.6 percent after the bank scrapped its interim dividend but said it had received approaches including a possible offer for the company. Elsewhere in the banking sector, a flurry of bullish broker notes helped boost stocks. Alliance and Leicester added 3.4 percent and Bradford and Bingley added 4.4 percent. HBOS gained 5.1 percent after Goldman Sachs added the stock to its "conviction buy"list. Shares prices rose when no banks bid for cash at the Bank of England's offer of £10bn of 3 month cash loans midway through the session.

Invesco added 5.6 percent after it said late on Tuesday that it has proposed moving its primary listing from London to New York following the recent loss of its foreign private issuer status in the US.

Tullow Oil gained 3.5 percent after Deutsche Bank raised its price target to 665 pence from 630 pence with a "buy" rating.

WPP added 3.2 percent after Morgan Stanley upgraded the stock to "overweight" from "equal-weight" but cut its price target to 770 pence from 800 pence.

DSG International fell 3.7 percent to hit an all time low, after Credit Suisse cut its price target to 95 pence from 155 pence. Traders also said a fall in first half profit from fellow electrical Kesa Electricals, down 5.5 percent, had affected the stock. Kesa Electricals, which was also the subject of a Credit Suisse price target cut to 265 pence from 320 pence, said the outlook for the second half was uncertain, particularly in the UK.

Wolseley fell 1.4 percent after it reported a profits fall on Monday and Citigroup cut its price target to 1,100 pence from 1,640 pence with a "buy" rating.

Economics
UK CBI distributive trades(Sept) 11.00 bst

There still hasn’t been a decisive reaction of consumer spending to the rise in mortgage interest rates. A more decisive tick down is expected in retail sentiment in September as the current, much publicised financial market turmoil, impacts expectations of future spending.

US GDP (Q2, final) 13.30 bst

The final reading of Q2 GDP is expected to stay at 4 percent.

UK Initial jobless claims (week 22 Sept) 13.30 bst

Initial jobless claims (Week 22 Sept) 13.30bst

Initial jobless claims are expected to be 330,000

US New home sales (Aug) 15.00

All signs point to further weakening in housing demand. Pending home sales collapsed in July, and homebuilder optimism remains very weak. New home sales re seen falling to an annualised rate of 850k, down from 870k. The South (-3 year on year) has recovered modestly in recent months, while the Midwest (-18 percent year on year) and West (20 percent year on year) continue to show significant year on year declines.

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