28/05/09

FTSE 100	4416.23, +4.51	Dow	8300.02, -173.47
FTSE 250	7588.05, +58.03	Nasdaq	1731.08, -19.35
FTSE All Share	2251.90, +4.11	S&P 500	893.06, -17.27
Nikkei	9451.39, +12.62	Hang Seng	17885.27
Oil (Crude)	$63.45	Gold	$953.30
Base Rate	0.5%	10 Yr Gilt	3.81%
£/$	1.591	Euro/Gbp	0.871

Markets

US stocks tumbled yesterday as treasury yields spiked fuelling concern that consumers could face higher borrowing costs. Treasuries sank following a government statement that they had received healthy demand for Wednesday’s $35 billion worth of 5 year notes. This has suggested there could be lower demand for longer term bonds such as the 10 year term which is linked to mortgage rates. Analysts are also concerned that the sheer volume of debt coming to the market could overwhelm demand, pushing yields higher.

The Dow Jones slumped 173.47 points to close at 8,300.02 while the S&P 500 dropped 17.27 points to end at 893.06. The Nasdaq lost 19.35 points to finish at 1,731.08.

General Motors plummeted 20% after confirming reports that bondholders rejected an offer from the company to trade $27 billion of debt for equity stakes. This suggests GM will now declare bankruptcy by the June 1st deadline, set by the US Treasury, to win concessions from its union, creditors and other parties.

SanDisk Corp and the semiconductor sector kept the Nasdaq's losses to a minimum after the company renewed a chip licence with Samsung Electronics. Shares jumped 14.3%.

US light crude oil for July delivery climbed $1 to $63.45 a barrel.

COMEX gold for August delivery was unchanged at $953.30 an ounce.

Treasuries tumbled, raising the yield on the 10 year note to 3.71% from 3.51%.

The Nikkei gained 12.62 points to close at 9,451.39 this morning. Sanyo Electronic, the world's largest maker of rechargeable batteries, leapt 5.2% after the government said it will try to boost usage of rechargeable cells. Japan Tobacco dropped 6.9% after Reuters said an opposition lawmaker proposed increasing cigarette taxes.

The Hong Kong Stock Exchange is closed today.

The FTSE 100 is currently 46.38 points lower at 4,369.85 this morning. Man Group tops the fallers board, down 12%, after reporting a 64% decline in pretax profit for the year. Banks lose ground following the yield movement in the US. RBS falls 3.1%, Lloyds is down 2% and Barclays slips 1.7%. Miners also decline following a dip in metal prices. Rio Tinto loses 2.6% while BHP Billiton dips 1.7%.

Economics
UK CBI distributive trades report (May) 11:00 BST

The massive improvement in sales in April (from -44 to 3) was probably due to the timing of Easter and the unseasonably warm weather, so some setback this month looks likely.

US Durable goods orders (Apr) 13:30 BST/ 08:30 EDT

Boeing reported 17 aircraft orders in April, quite low by historical standards but up from the single digit orders in February and March. Meanwhile, the ISM new-orders index has risen strongly for the past two months, up 6pts in April to 47.2 after climbing 8.1pts in March. Still, in the latest Philadelphia Fed survey, the majority of respondents still saw lower underlying demand over the past two months. Analysts look for April durable orders to rise 0.6%, with ex-transportation orders rising 0.2%, not quite reversing the declines registered in March.

US Initial jobless claims (week 23 May) 13:30 BST/ 08:30 EDT

Last week’s initial claims fell to 631,000, down from 643,000 previously. The Labour Department indicated that the weekly drop in claims came in states that had reported a jump in auto-related filings, which probably reflected auto-dealer closings. Analysts look for claims at 625,000 this week. Continuing claims for the prior week could rise to a new high of 6.74m, up from 6.66m.

US New home sales (Apr) 15:00 BST/ 10:00 EDT

The latest Beige Book noted some signs of stabilisation in housing markets. Many districts pointed to home-buyer tax credits, low mortgage rates, and more affordable prices as boosting the number of potential buyers. A number of districts noted modest sales improvement in some areas. The NAHB homebuilder survey has also shown some uptick in its indexes of present sales and prospective buyer traffic. Analysts look for April new home sales to rise to 390,000, which would be the highest reading since last October.

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