LONDON (Thomson Financial) – US SUMMARY: Stocks continue sharp fall as bond yields rise; oil up on supply worries
Index Change Pct change
*DJIA 13266.73 -198.94 -1.48
*Nasdaq 2541.38 -45.80 -1.77
*S&P; 500 1490.72 -26.66 -1.76
Dow Future 13261.00 -200.00 -1.49 (2014 GMT)
Nasdaq Future 1883.25 +0.75 +0.04 (0324 GMT)
S&P; Future 1489.30 -27.10 -1.79 (2018 GMT)
eur-usd 1.3432 -0.0074
for July 66.93 usd +97 cents
10 yr US
treasury 5.13 pct +0.16 pct
* yesterday’s close
STOCKS: Wall Street fell further on Thursday, as rising bond yields dented hopes of an interest rate cut later in the year, while retail sales for the year came in mixed — improving wholesale figures accompanied by concerns that rising
gas prices would cut into consumer spending.
The Commerce Department said inventories among US wholesalers rose 0.03 pct in April to a seasonally adjusted 394.54 bln usd after increasing a revised 0.4 pct in March. The March increase had been pegged at 0.3 pct. A dip in
applications for unemployment benefits last week — falling by 1,000 applications to 309,000 — indicates a healthy labour market, thus also making a rate cut seem less likely.
FOREX: The US dollar rose against other major currencies Thursday as rising bond yields dashed hopes of an interest rate cut. Higher interest rates can bolster a currency by making investments denominated in it more attractive.
The euro — which was already down after the European Central Bank raised its benchmark interest rate but sent moderate signals on its future course — dropped further. The pound sank to 1.9771 usd from 1.9928 after the
Bank of England held its key interest rate steady. The dollar strengthened to 121.11 Japanese yen from 121.01 yen.
In other trading, the dollar bought 1.0620 cad, up from 1.0588, and 1.2248 sfr, rising from 1.2163.
BONDS: US Treasury prices fell, as inflation shows no sign of abating thus dampening chances of a rate hike, sending the yield on the benchmark 10-year note over 5 pct for the first time since August.
If the yield reaches 5.25 pct, a five-year high, it would match the Federal Reserve’s current benchmark interest rate — signalling that the market is, in a sense, beating the central bank in hiking rates to curb inflation. The Fed has kept rates
on hold since last summer, after about two years of gradual increases.
OIL: Oil and gasoline prices rose on concerns US refineries aren’t producing enough to meet domestic demand. Gasoline futures for July inched up 0.23 cent to settle at 2.1927 usd a gallon on the New York Mercantile Exchange.
The US has experienced an unusually high number of refinery outages this spring. Reports Thursday of a partial shutdown at a 60,000 barrel-per-day Delek US Holdings Inc refinery in Texas, and that Suncor Energy Inc will shut part of a 246,000 bpd facility in Alberta for 50 days for maintenance, were the latest outages. On Tuesday, Valero Energy Corp said its gasoline production would be cut by a total of 65,000 bpd due to problems at two refineries.
GOLD: Gold prices fell in New York as the dollar strengthened, thus lessening the precious metal’s appeal as an alternative investment. August gold dropped 9.40 usd to settle at 665.20 usd an ounce on the Nymex while July silver fell 23.7 cents to close at 13.48 usd.
April trade balance (1230 GMT)
Trade balance, 2006 annual revision (1230 GMT)
ASIA SUMMARY: Stocks tumble on Wall Street fall; oil eases on profit sales
Index Change Pct change
Nikkei 225 17750.20 -303.18 -1.68 (0343 GMT)
S&P;/ASX 200 6216.50 -94.60 -1.50 (0343 GMT)
Straits Times 3497.71 -48.62 -1.37 (0343 GMT)
Hang Seng 20479.83 -320.33 -1.54 (0344 GMT)
KLSE Composite 1352.48 -11.93 -0.87 (0329 GMT)
BSE Sensex 14051.33 -134.85 -0.95 (0430 GMT)
usd-yen 121.24 -0.04 -0.03 (Intra-day trade)
usd-sgd 1.5374 +0.0002 +0.01 (Intra-day trade)
usd-inr 40.90 +0.19 +0.47 (Intra-day trade)
10-year JGBs 1.895 pct +0.035 +1.88 (Intra-day trade)
Brent North Sea 71.06 usd -0.16 -0.22 (Intra-day trade)
crude for July
STOCKS: Asian markets slipped into the red tracking the fall on Wall Street. Tokyo, Hong Kong, Taipei and Manila shares ended the morning session lower, after Wall Street tumbled for the third straight session as rising US government bond yields further dashed hopes for a cut in interest rates. Jakarta share prices were sharply lower in early trade, in line with other markets in East Asia and the Wall Street decline.
BONDS: Japanese government bond prices ended the morning session weaker, tracking sharp declines in US Treasury bond prices overnight.
FOREX: The US dollar was up against the yen and euro in Sydney with currency markets reacting to the global equity market sell-off in the absence of key economic data. The sterling was the clear loser in overnight trade after the Bank of England maintained interest rates, with the euro retreating in step with the UK currency.
OIL: Prices fell in Asian trading hours as players took profits on the gains made overnight amid persistent concern about US gasoline supplies during the peak season for demand. At 0230 GMT, the New York Mercantile Exchange’s main contract, light sweet crude for delivery in July, was down 0.18 usd at 66.75 usd a barrel from 66.93 usd in late trading in the US overnight.
METALS: Gold steadied above 670 usd yesterday after dipping slightly the day before with analysts saying while the metal might remain in consolidation mode, it is still poised to trend higher longer term.
In other precious metals yesterday, silver was little changed at 13.68 usd against 13.67, platinum edged up to 1,297 usd against 1,289, while palladium was flat at 363 usd.
Copper was steady yesterday as strike threats in South America coupled with dwindling stock levels supported prices. Base metals weakened across the board in early afternoon trade yesterday, weighed down by nickel prices, which dropped to a 10-week low following the LME’s implementation of new trading rules that will effectively make more metal available to the market.
Australia April housing finance
Japan April machinery orders
Japan May money supply
Japan May bank lending
Bank of Korea interest rate-setting meeting
Hong Kong’s Johnson Electric FY results
Hong Kong’s Link REIT FY results
Ta Yang Group starts trading in Hong Kong
Taiwan 364-day, 100 bln twd offer of certificates of deposit
Taiwan’s UMC May sales
Taiwan’s TSMC May sales
Indonesia’s Summarecon Agung EGM
Philippine March foreign direct investment
Philippine banks’ end-April bad loans
EUROPE SUMMARY: London shares close lower; base metals weaken across the board as nickel price dips to 10-wk low
Index Change Pct change
*FTSE 6505.10 -17.6 -0.26
*DAX 7618.61 -111.44 -1.44
*CAC 5890.49 -87.38 -1.46
Bond 90.28 -0.5
Bond 92.26 -1.16
stg-usd 1.9858 -0.0066
eur-usd 1.3477 -0.0022
sfr-usd 1.2227 +0.0057
ICE (July) 71.40 usd +38 cents
* yesterday’s close
STOCKS: UK blue chips closed lower, as Wall Street remained weaker, with the UK construction sector down on concerns the Bank of England’s decision to keep its key repo rate unchanged at the six-year high of 5.5 pct has upped the risk of a further hike by the end of the year. Europe manufacturing and industrial data will remain in focus today while focus will also fall on Lloyds TSB Group PLC as the bank announces its trading performance. Meanwhile, no major corporates are scheduled to declare their results today.
BONDS: European government bonds tracked US Treasuries lower, after yields on both side of the Atlantic broke key levels, setting a bearish tone for the market. In the UK, gilts fell after the Bank of England kept its key repo rate unchanged.
FOREX: The euro continued to remain vulnerable ever since the European Central Bank’s raised rates Wednesday and failed to sound as hawkish as the markets were expecting. In the UK, the pound continued to slide after the Bank of England left interest rates unchanged. The decision was widely expected. Analysts don’t expect the pound to fall much further, even as interest rates are expected to go up in coming months.
METALS: Base metals weakened across the board in early afternoon trade yesterday, weighed down by nickel prices, which dropped to a 10-week low following the LME’s implementation of new trading rules that will effectively make more metal available to the market. Copper was trading at 7,406 usd against 7,420 at the close yesterday.
Among other metals, lead eased to 2,290 usd against 2,300, aluminium dropped to 2,740 usd from 2,743, and zinc dipped to 3,655 from 3,680. Tin was steady at 13,900 usd. Gold steadied above 670 usd after dipping slightly Wednesday. Oil rose on OPEC’s decision not to increase production quotas, which sparked supply fears. At 1712 BST (1612 GMT), benchmark Brent crude contracts for July delivery were up 38 cents at 71.40 usd per barrel.