9/9/08

FTSE 100	5446.3, +205.6	Dow	11510.74, +290.43
FTSE 250	9270.0, +303.2	Nasdaq	2269.76, +13.88
FTSE All Share	2782.38, +101.47	S&P 500	1267.79, +25.48
Nikkei	12400.65, -223.81	Hang Seng	20414.17, -380.1
Oil (Crude)	$106.34	Gold	$802.50
Base Rate	5%	10 Yr Gilt	4.47%
£/$	1.757	Euro/Gbp	0.804

Markets
US markets rallied yesterday following the governments bailout of Fannie Mae and Freddie Mac. Investors hope the move will shore up confidence in the housing market providing an environment in which mortgage rates can drop.

The Dow Jones surged 290.43 points to close at 11,510.74, the S&P 500 jumped 25.48 points to end at 1,267.79. The Nasdaq gained 13.88 points to finish at 2,269.76.

Banking shares obviously led the rally with Bank of America and Citigroup among the biggest drivers on the Dow and S&P 500. Bank of America rose 7.8% while Citigroup added 6.6%. However, it wasn't all positive with Lehman Brothers sinking 12.7% as investors continued to worry about its financial health. Washington Mutual finished 3.5% lower on news that its CEO has been ousted.

Home builders also went higher, with the Dow Jones home construction index jumping more than 10%. Luxury home builder Toll Brothers soared 9.4%.

In the tech sector, Cisco Systems advanced 5% after Goldman Sachs included the network equipment maker on its list of favourite tech names. The stock topped the Nasdaq's risers list.

UAL Corp, parent of United Airlines, denied talk that a bankruptcy filing was imminent, but shares still finished 11% lower. Trading had been stopped by the Nasdaq earlier in the session after dropping 27%, but UAL blamed speculation on an erroneously republished news article from 2002.

US light crude oil for October delivery gained just $0.11 to close at $106.34 a barrel. COMEX gold for December delivery slipped $0.30 to $802.50 an ounce. Treasury prices gained, lowering the yield on the 10 year note to 3.67% from 3.72%.

The Nikkei dropped 223.81 points to close at 12,400.65 this morning. Stocks slumped after cargo rates for commodities fell to a one year low, dragging down shipping companies. Banking shares also went lower, retreating from yesterdays rally.

The Hang Seng is currently 380.1 points lower at 20,414.17. Again, shipping lines were lower following the decline in rates and banking shares also shared the fallers board, damaged further by Goldman Sachs which downgraded Chinese banks.

The FTSE 100 opened cautiously today following yesterdays technical problems which wiped out most of the days trading, currently the index is 63.6 points higher at 5,509.9. RBS tops the risers board, adding 5.3%, while Experian follows closely behind, gaining 5.5%. On the downside, Lonmin tops the fallers board, off 4.3%.

Economics
UK RICS House Prices (Aug) 0001 BST

At the beginning of August there were rumours that the government was set to abolish stamp duty. This might have depressed current sales, as people waited for a formal announcement but may have boosted new buyer enquiries. However, this is unlikely to stem the downward momentum in prices so we still expect the vast majority of surveyors to be reporting falling prices.

US Pending Home Sales (Jul) 1500 BST/1000 EDT

Pending home sales have risen notably in the west, up by 27% from the cycle low in August 2007. The recovery has been more tentative in the rest of the country, although all four regions improved last month, with total pending sales rising 5.3% in June. Analysts look for a 0.5% decline in July, which would still mean an increase in year over year sales to -4.6% from -12.2%. This would be consistent with further improvement in existing home sales, which are down 13% year over year through July.

US Wholesale Inventories (Jul) 1500 BST/1000 EDT

Increases in wholesale inventories and sales should be smaller in the next few months owing to lower oil prices, but the impact may not be fully felt until August. Analysts expect July wholesale inventories to rise 0.5%.

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