30/6/08

The Dow Jones dropped 106.9 points to close at 11,346.5, the S&P 500 fell 4.75 points to end at 1,278.4. The Nasdaq lost 5.74 points to finish at 2,315.63.

Financial stocks caused the biggest drag on the S&P 500. Merrill Lynch closed 1% lower after Lehman Brothers predicted a $5.4 billion second quarter write down, citing its current exposure to bond insurers. JPMorgan Chase & Co slid 3.5% while Citigroup declined 2.4%

AIG slid 1.2% following reports published that suggested it would take a $5 billion quarterly loss from its insurance units. Bloomberg News suggested that the company would absorb the loss with sales of investments from a dozen insurance units hit by the subprime meltdown.

KB Home fell after reporting a bigger than expected quarterly loss. As a result, the No. 5 US home builder closed 2.3% lower.

Research in Motion continued its slide from Thursday after forecasting a weaker than expected profit outlook. Shares in the company fell a further 2%.

Merck & Co was one of a few bright spots for the day. The pharmaceutical company climbed 2.2% after announcing that a late stage study showed its treatment provided similar pain relief to AstraZeneca's Zomig treatment, but was better tolerated.

US light crude oil for August delivery settled at $140.21 a barrel, having earlier hit an intra day high of $142.99.

COMEX gold for August delivery gained $16.20 to close at $931.30 an ounce.

The Nikkei dropped 63 points to close at 13,481.4 this morning. The index had been higher for much of the session, but fell after the stronger yen diminished the earnings outlook for makers of electronics and cars. Subaru car producer, Fuji Heavy Industries, led a decline by car makers. Sony Corp closed at its lowest level in two months.

The Hang Seng is just 18.8 points lower at 22,023.5 this morning, but that would still be enough to leave the index at its worst first half drop for 14 years. Developers are on the back foot after BOC Hong Kong Holdings Ltd said it will mortgage rates by 25 basis points. Cnooc Ltd, China's biggest offshore oil producer, advances in line with oil prices.

The Footsie closed 11.7 points ahead at 5529.9 on Friday, despite another wobbly start on Wall Street following a 3% fall for the Dow Jones Industrial Average in the previous session. US and UK markets suffered badly on Thursday on lingering inflation concerns and fears over the economic outlook amid rising commodity prices. Official figures on Friday also showed UK growth at 0.3% in the first quarter of 2008 - lower than first thought - renewing fears of a recession.

The Footsie's energy stocks dominated the risers board on the soaring oil prices, led by prospector Tullow, which gained 49p to 975p, or 5%. Cairn Energy was 121p better at 3207p, BG Group cheered 53p to 1251p and Royal Dutch Shell was 27p better off at 1962p. Crude costs weighed on cruise ship operator Carnival, which fell almost 4%, or 62p to 1579p, although fuel-hungry British Airways recovered earlier falls to finish 1.75p higher at 213p.

The chief Footsie faller was heating and plumbing giant Wolseley, down 16p to 388p, after a downgrade from ABN Amro which feared for the group's prospects in a deteriorating UK market.

Banks saw differing fortunes in a mixed session. FTSE 250 lender Bradford & Bingley led the sector lower with shares down almost 21%, or 16.75p to 63.25p, after the Resolution-led team of investors pulled plans to launch an alternative fundraising bid for the group. HBOS spent much of the day trading below its 275p "discounted" rights issue price after investors overwhelmingly backed its £4bn fund-raising move on Thursday, but the shares rebounded later to close at 278.5p, 2.5p up. Barclays however was a faller, off 5.75p at 298p, or 2%.

Tesco and Sainsbury's were also on the back foot amid reports of a new price war brewing in the sector. Sainsbury's lost 6.25p to 308.75p, while Tesco - whose shareholders voted against a resolution from a TV chef calling for the retail giant to improve its chicken-rearing standards today - shed 4.2p to 360.5p. Fellow supermarket Morrisons was also a faller, down 5.75p at 262.5p.

Defence giant BAE Systems meanwhile was more than 2% ahead, or 9p to 427.5p, after the group announced that chief operating officer Ian King would be taking over from chief executive Mike Turner from September 1. Elsewhere coach, rail and bus group National Express rose nearly 3%, or 24.5p to 941.5p, despite the oil price hike as it gave a bullish outlook amid the switch to public transport.

Economics
UK GfK consumer confidence (Jun) 00.01 bst

Consumer confidence is expected to deteriorate further on the back of higher oil prices, falling house prices and a worsening in employment prospects.

UK Mortgage approvals (May) 09.30 bst

The BBA data (which accounts for roughly 60 percent of the total UK mortgage issuance) fell sharply in May which suggests a further deterioration. As such, a further new low in mortgage approvals looks likely. Consumer credit is also expected to edge down.

US Chicago PMI (Jun) 14.45 bst)

The reading from the June Empire manufacturing and Philadelphia Fed surveys were soft, with weaker activity highlighted by declines in new orders and shipments. The Chicago PMI is expected to fall to 47, down from 49.1 in May. This would also be consistent with around 47 for the ISM manufacturing.

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