Dollar Gains Against Euro as Stock Declines Spur Safety Bid

By Andrew MacAskill and Ye Xie

Nov. 28 (Bloomberg) -- The dollar rose against the euro, trimming its biggest weekly decline since September, as stocks fell, prompting investors to take refuge in U.S. Treasuries.

The dollar also advanced versus the Japanese yen, South African rand and Swedish krona as European shares dropped for the first time in five days and U.S. stock futures pointed to a lower opening. The euro weakened against the yen and the pound as investors added to bets the European Central Bank will cut interest rates next week after inflation slowed by the most since at least 1991.

“The momentum in equities has faded and so people are turning to the safety of the dollar,” said Lee Hardman, a currency strategist in London at Bank of Tokyo-Mitsubishi Ltd. “The recent return of risk appetite is likely to prove short lived because the economic problems aren’t over.”

The dollar strengthened 1.3 percent to $1.2734 per euro at 8:26 a.m. in New York, from $1.2904 yesterday. It’s down 1.1 percent from Nov. 21, the biggest weekly drop since Sept. 19. The dollar gained 0.3 percent to 95.46 yen, from 95.19 yesterday, and has declined 0.6 percent this week. The euro weakened to 121.57 yen, from 122.89 yesterday, trimming a weekly gain to 0.7 percent this week.

The Dow Jones Stoxx 600 Index declined 1.2 percent and futures on the Standard & Poor’s 500 Index dropped 0.7 percent, increasing the attractiveness of dollar-based assets as a haven. Treasuries rose today, heading for their biggest monthly gain since 1981, with the yield on the 10-year note falling three basis points to 2.94 percent. That’s three basis points short of the record low 2.91 percent reached this week.

Dollar Index

The ICE’s Dollar Index, which tracks the greenback against the euro, the yen, the pound, the Canadian dollar, the Swiss franc and Sweden’s krona, rose 1.1 percent to 86.437. The index climbed to 88.463 on Nov. 21, the highest since April 2006.

India’s rupee fell the most in two weeks, losing 1.4 percent to 50.1075 per dollar, after terrorist attacks across Mumbai left at least 120 people dead. Authorities closed stock, bond, commodity and currency markets yesterday. The Thai baht declined for a third day, reaching 35.53, the lowest level since February 2007, as protesters occupied Bangkok’s international airport for a fourth day.

The rupee, the third-worst performer among Asia’s 10 most- active currencies outside Japan, according to data compiled by Bloomberg, may not fall further as a consequence of the terrorist attacks, Gerry Celaya, chief strategist at RedTower Inc. in Aberdeen, Scotland said in a Bloomberg Television interview.

‘Tragic Events’

“It is a separate matter, basically the markets are getting used to these tragic events since 9/11,” Celaya said. “Investors are used to taking a long-term view now. They look at these tragic events as leading to periods of reflection. People will think about it and taking a five or 10 year view, then you have to make decisions based on that.”

The euro extended declines against the dollar and the yen after the European Union statistics office in Luxembourg said inflation in the region slowed to 2.1 percent in November from 3.2 percent in October. A separate report showed unemployment in the region rose to 7.7 percent in October from 7.6 percent in September, the highest level since January 2007.

“Some of the shine has come off the euro since that data came out,” said Neil Jones, head of hedge-fund sales in London at Mizuho Capital Markets. “It shows Europe is still inheriting the whole credit slowdown. The ECB’s now talking about aggressive interest-rate cuts and that’s going to weigh on the currency.”

Rescue Packages

Investors added to bets the ECB will cut its main refinancing rate at least 75 basis points by March from 3.25 percent. The implied yield on three-month Euribor futures contracts expiring in March fell 7 basis points to 2.61 percent today. The yield was 16 basis points above the ECB’s benchmark, which is at 3.25 percent, in the past year. The central bank lowered its key rate by 100 basis points since Oct. 8, to 3.25 percent. Policy makers next meet on Dec. 4.

The dollar was poised for a third monthly decline against the yen and its first monthly loss versus the euro since June, on speculation policy makers’ steps to spur growth and lending reduced demand for the relative safety of U.S. assets.

The Federal Reseve said on Nov. 25 it will assign $800 billion in new funding to bolster credit flows to homebuyers, consumers and small businesses and will take on credit risk by buying debt. The European Union proposed a package for its 27 member countries on Nov. 26 after data this month showed the euro region fell into a recession in the third quarter for the first time since the introduction of the euro in 1999.

To contact the reporters on this story: Andrew MacAskill in London at amacaskill@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net

Read more...

Brazil Real Weakens as Commodity Price Drop May Hurt Inflows

By Adriana Brasileiro

Nov. 28 (Bloomberg) -- Brazil’s real weakened for a second day as falling commodity prices cut into dollar inflows from the country’s exports.

Nearly two-thirds of Brazilian exports are commodities such as iron ore, coffee and crude oil.

The real weakened 0.9 percent to 2.3265 per dollar at 7:39 a.m. New York time from 2.3067 yesterday. Currency trading may be lighter today because of the U.S. Thanksgiving holiday yesterday.

The central bank bought reais in the local foreign-exchange market today to support the currency. The bank paid 2.3220 per dollar at the auction.

Commodity prices have plunged from records since the end of June. The UBS Bloomberg Constant Maturity Commodity Index has fallen 46 percent to 917.61 from a high this year of 1714.36 high on July 2.

Brazilian bonds rose, with the yield on the zero-coupon note due January 2010 falling six basis points, or 0.06 percentage point, to 14.78 percent, according to Banco Votorantim.

The yield on Brazil’s overnight futures contract for January 2009 delivery was little changed at 13.55 percent.

To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net

Read more...

Aluminum Heads for Worst Losing Streak Since 1999 on Supply

By Claudia Carpenter

Nov. 28 (Bloomberg) -- Aluminum headed for its worst losing streak since 1999 in London on speculation increased shipments from China, the world’s largest producer, will exacerbate a global oversupply of the metal.

China may reduce or even cancel taxes on primary aluminum exports, Interfax reported today, citing an unidentified official from the China Nonferrous Metals Industry Association. Aluminum supply will outpace demand by 1.4 million metric tons next year, double this year’s surplus, according to BNP Paribas SA.

“The immediate concern in the aluminum market is that you get some kind of production cuts and a change in export taxes would be counterproductive to that,” said Michael Widmer, a BNP Paribas analyst in London. “If more metal found its way outside China we would have an even bigger oversupply in the global aluminum market.”

Aluminum for delivery in three months declined $16, or 0.9 percent, to $1,775 a metric ton as of 9:24 a.m. on the London Metal Exchange, bringing the drop for November to 13 percent. The metal has declined for five consecutive months, the longest run since the period ending February 1999.

The three-month contract for the metal used in beverage cans and cars will probably average $2,000 a ton next year, down from $2,600 this year, BNP forecasts. Inventories of aluminum in warehouses monitored by the LME jumped 6,975 tons to 1.8 million tons, the most since Dec. 6, 1994.

Copper dropped $51 to $3,645 a ton after inventories gained 2,925 tons to 291,650 tons, the most since Feb. 25, 2004. Copper averaged $2,726 in February 2004.

Copper has tumbled 45 percent this year and aluminum is down 26 percent.

The three-month lead contract dropped $8 to $1,097 a ton and earlier fell to $1,095, the lowest since Aug. 2, 2006. Inventories of the metal used in car batteries rose 400 tons to 41,600 tons.

Zinc declined $6 to $1,214 a ton and nickel fell $150 to $10,100 a ton.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net

Read more...

Gold Poised for Biggest Monthly Gain Since 1999 as Dollar Drops

By Chanyaporn Chanjaroen

Nov. 28 (Bloomberg) -- Gold headed for its biggest monthly advance since 1999 in London as a weaker dollar increased the appeal of the metal as a hedge against further declines in the U.S. currency.

The dollar is poised for a third monthly decline against the yen and its first monthly loss versus the euro since June. Gold prices have also been buoyed by demand for physical metal and exchange-traded funds. Gold demand rose 18 percent in the third quarter, the World Gold Council said this month.

“The dollar weakness is one reason but demand has also turned out to be stronger than expected in the third quarter,” said Dan Smith, a Standard Chartered Plc analyst in London. Gold may reach $850 an ounce by the end of the year, he said.

Gold for immediate delivery fell $2.25, or 0.3 percent, today to $813.55 an ounce as of 11:06 a.m. in London, for a monthly gain of more than 12 percent. That’s the most since September 1999.

December futures were $3.30, or 0.4 percent, higher at $811.80 in electronic trading on the Comex division of the New York Mercantile Exchange.

Gold fell to $813.50 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $814 at the previous afternoon fixing.

Gold in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, was unchanged at 758.12 tons, according to data on the company’s Web site. The fund was at a record 770.64 tons on Oct. 13, overtaking Japan as the world’s seventh- largest holder of gold.

Platinum Drops

Among other metals for immediate delivery, silver fell 1.1 percent to $10.25 an ounce. Platinum lost $1.5, or 0.2 percent, to $861.50 and palladium was $3, or 1.6 percent, lower at $189. Platinum and palladium are used in autocatalysts.

Fuji Heavy Industries Ltd., the maker of Subaru-brand cars, said it will cut Japan production by 40,000 units between January and March. Fuji Heavy’s full-year global production will fall to 589,000 units from 649,000 units, a spokesman said yesterday.

U.S. industrywide car sales are headed for the worst year since 1991 as banks cut back on lending and unemployment rises. U.S. automakers led by General Motors Corp. are seeking $25 billion in federal loans to help stave off a financial collapse.

To contact the reporter on this story Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net

Read more...

Crude Oil Trades Little Changed as OPEC Considers Output Cut

By Alexander Kwiatkowski

Nov. 28 (Bloomberg) -- Crude oil traded little changed in London as OPEC gathered to consider cutting production in an attempt to halt the slide in prices.

The Organization of Petroleum Exporting Countries meets in Cairo this weekend to consider further output cuts. Prices are being driven by the global economic crisis, Qatar’s Oil Minister said on arrival in Egypt. Oil has slumped 63 percent from a record $147.27 a barrel in New York on July 11 as demand falls around the world and economic reports show a deepening recession in the U.S., the world’s largest oil user.

“OPEC is aware that the market is not so concerned about the production side as it is about demand,” said Eugen Weinberg, a Commerzbank AG analyst in Frankfurt. “There is lots and lots of pressure on the market and that is weighing on the price.”

Brent crude oil for January settlement traded up 7 cents at $53.20 on London’s ICE Futures Europe exchange at 1:14 p.m. local time. It earlier fell as much as 98 cents to $52.15 a barrel.

On the New York Mercantile Exchange, crude oil for January delivery dropped 89 cents, or 1.6 percent, to $53.55 a barrel at 1:01 p.m. London time. Nymex was open only for electronic trading yesterday because of the U.S. Thanksgiving holiday. Futures closed at $54.44 on Nov. 26 after rising 7.2 percent.

Concerns about oil consumption have increased after reports showed the U.S. economy slowed and consumer spending fell. Gasoline demand dropped 1.3 percent from last week, the Energy Department said in its weekly report on Nov. 26.

Consumer Slump

Ministers from OPEC, which supplies 40 percent of the world’s oil, are meeting tomorrow for the third time in as many months to discuss a further cut in production.

OPEC decided last month to reduce supply quotas by 1.5 million barrels a day. The Cairo meeting, originally intended just for ministers from Arab nations, was expanded into a full OPEC meeting to include Venezuela, Iran and Angola.

“The market is very related to the global economic crisis,” Qatar’s Oil Minister Abdullah bin Hamad al-Attiyah said at Cairo airport today. “There’s pressure on demand.” Al- Attiyah couldn’t say whether the group will cut production at the Cairo meeting.

“Now we are preparing the data and we will take the final decision in Algeria,” Iranian Oil Minister Gholamhossein Nozari said as he arrived at his hotel in Cairo. The group meets in Oran, Algeria, on Dec. 17.

Saudi Oil Minister Ali al-Naimi declined to speak as he arrived in Cairo today.

“As long as people are worried about the overall economy, prices will continue to fall,” said Ehsan Ul-Haq, head of research at JBC Energy GmbH in Vienna. “By the end of the year we think they will cut another 1.5 million to 2 million barrels a day. It could happen in Cairo or Algeria, it doesn’t matter.”

Fourteen of 38 analysts surveyed by Bloomberg News, or 36 percent, said oil prices will decline through Dec. 5. Twelve respondents, or 32 percent, said oil will rise and 12 forecast oil will be little changed.

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net

Read more...

Citigroup Says Buy Porsche Options, Not Shares, to Ride Upside

By Gareth Gore

Nov. 28 (Bloomberg) -- Citigroup Inc. advised clients to buy Porsche SE call options as a way to profit from an advance in the company’s shares while still guarding against the “risk” of holding the German luxury carmaker’s stock.

The brokerage advised using strategies including buying call options expiring in June at a strike price of 60 euros. Investors can reduce the cost of the transaction by simultaneously selling twice as many call options expiring in the same month at a strike price of 80 euros, it added.

The strategy would remain profitable so long as Porsche shares remain within the range of 60.10 euros to 90.90 euros, according to Citigroup. Shares of the maker of the 911 sports car slipped 2.9 percent to 51.39 euros as of 10:59 a.m. in Frankfurt, extending their decline this year to 63 percent.

“While we certainly wouldn’t suggest investors chase the shares, it might be prudent to have in place some ‘protection’ should the shares” rise, analysts including London-based Stuart MacDonnell wrote in the note sent late yesterday. Citigroup cut the price estimate on the stock to 50 euros from 57 euros and reiterated its “sell” recommendation.

Earlier this week the Stuttgart-based carmaker reported a 15 percent drop in four-month sales and said it may delay taking control of Volkswagen AG as the credit crisis and global recession curb demand for its sports cars. Chief Executive Officer Wendelin Wiedeking said Porsche may no longer take 50 percent ownership of Volkswagen this year.

Option Prices

The strategy reduces the cost of buying calls outright at a time when option prices are “expensive,” the analysts wrote in the note. Call options give the purchaser the right to buy shares at a set price on or by a given date. By selling a call option, an investor is betting that the contract won’t be exercised, allowing them to keep as profit the price paid.

“Implied volatility continues to trade at elevated levels, and this makes option prices expensive,” they wrote. “However, an interesting consequence of the preoccupation with downside risks across the market is that the price of upside call options is somewhat depressed due to the high volumes.”

The VStoxx Index, which gauges the price paid for options on Euro Stoxx 50 stocks, has surged to a level three times higher than it was a year ago after stock swings and uncertainty increased. Options are derivatives, or securities that derive their value from an underlying asset, and can be used to protect against a decline or to speculate on the asset’s future value.

To contact the reporter on this story: Gareth Gore in Madrid ggore1@bloomberg.net

Read more...

U.K. Stocks Decline; Kazakhmys, Copper Producers Lead Retreat

By Sarah Jones

Nov. 28 (Bloomberg) -- U.K. stocks declined, led by copper producers, as the base metal retreated in London after inventories rose the most since 2004.

Kazakhmys Plc, Kazakhstan’s largest copper producer, Antofagasta Plc, and Xstrata Plc tumbled more than 5 percent as copper declined for a second day. BP Plc led energy companies lower as crude declined 2.5 percent.

The FTSE 100 Index dropped 8.08, or 0.2 percent, to 4,218.02 at 11:20 a.m. in London, having swung between gains and losses at least nine times. The FTSE All-Share Index fell 0.2 percent, while Ireland’s ISEQ Index lost 0.3 percent.

The FTSE 100 has still advanced 11 percent this week, pacing global equities higher, after China cut interest rates and the Federal Reserve’s pledge to buy $600 billion of debt sent mortgage rates down by the most in at least seven years.

“Global equity markets are coming to the end of what, by any standards, has been a spectacular week of recovery,” said David Buik, a London-based trader at BGC Partners in London. “Surely this is just a magnificent ‘dead-cat-bounce.’ Many doubt the world is anywhere near the depth of the recession.”

Kazakhmys sank 6.9 percent to 250.5 pence. Antofagasta Plc, owner of copper mines in Chile, dropped 6.1 percent to 434 pence. Xstrata Plc, the world’s fourth-largest copper producer, retreated 5.2 percent to 909 pence.

Copper dropped $56.50 to $3,639 a ton on the London Metal Exchange after inventories gained 2,925 tons to 291,650 tons, the most since Feb. 25, 2004. Copper averaged $2,726 in February 2004.

Rio Tinto Group Plc, the world’s third- largest mining company, fell 1.3 percent to 1,629 pence.

The company may have its credit rating downgraded because of its high level of debt and declining commodity prices, Standard & Poor’s Ratings Services said.

The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.

Rentokil Initial Plc (RTO LN) gained 2 pence, or 5.7 percent, to 37 after the world’s largest pest-control provider said Michael Murray will replace Andrew Macfarlane as chief financial officer from Jan. 5.

Murray, 41, joins from Global Solutions Limited, a support services group that was recently acquired by G4S Plc.

Royal Bank of Scotland Group Plc (RBS LN) dropped 2.3 pence, or 4.2 percent, to 52.7. Investors took 0.2 percent of shares offered in the U.K.’s biggest bank bailout leaving the government with almost 20 billion pounds ($31 billion) of stock and a majority stake.

Investors bought almost 56 million shares at 65.5 pence apiece. The U.K. government, which underwrote the offering, will buy the remaining ordinary shares for a total stake of 58 percent.

Tate & Lyle Plc (TATE LN) jumped 18.25 pence, or 4.9 percent, to 390.75 after the maker of the low-calorie sweetener Splenda appointed Peter Gershon as chairman. He will replace David Lees by the end of next year. Gershon joins the board on Feb. 1.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

Read more...

ALL, Bradesco, Concha y Toro, Perdigao: Latin Equity Preview

Nov. 28 (Bloomberg) -- The following companies may have unusual price changes today in Latin America trading. Stock symbols are in parentheses and share prices reflect the previous close.

The MSCI Latin America Index rose 1.5 percent yesterday to 2,025.44.

Brazil

ALL America Latina Logistica SA (ALLL11 BS): Latin America’s biggest railroad operator said it was “surprised” by reports the federal police were investigating the sale of government-owned rail cars and engines for scrap because its license to operate rail lines permits such selling. The company must replace the scrapped units or refund the government at the end of its license, ALL said yesterday in a regulatory filing. ALL fell 6.8 percent to 11 reais.

Banco Bradesco SA (BBDC4 BS): Brazil’s second-biggest non- state bank plans to buy back as many as 7.5 million common shares and 7.5 million preferred shares during the next six months, according to a filing posted yesterday on Brazil’s securities regulator Web site. Bradesco preferred shares, the most traded, rose 1.7 percent to 24 reais.

Gerdau SA (GGBR4 BS): Latin America’s largest steelmaker said it is reassessing its investment plans and may delay the construction of a steel mill in Argentina. Gerdau rose 0.8 percent to 14.60 reais.

Perdigao SA (PRGA3 BS): Brazil’s biggest food company received a 283.7 million reais ($124.9 million) loan from Brazil’s national development bank, known as BNDES, to finance its expansion projects, Perdigao said yesterday in a regulatory filing. Perdigao fell 2 percent to 35 reais.

Petroleo Brasileiro SA (PETR4 BS): Brazil’s state- controlled oil company borrowed 751 million reais ($323 million) from Banco do Brasil last month, Folha de S. Paulo said. Petrobras fell 2.8 percent to 19.95 reais.

Telemar Norte Leste SA (TMAR5 BS): The Brazilian phone company buying smaller rival Brasil Telecom Participacoes SA said yesterday it completed the fundraising needed for the purchase after issuing 2 billion reais ($880 million) in local bonds. Costs rose “compared with the transactions done in the first half of the year as risk aversion increased,” Chief Financial Officer Jose Luiz Salazar said in a phone interview yesterday. Telemar fell 5.6 percent to 53 reais.

Chile

Envases del Pacifico SA (EDELPA CC): The Chilean maker of plastic packaging said directors approved a special dividend of 5 pesos a share. The dividend will be paid Dec. 29 to shareholders as of Dec. 22, the company said in a filing yesterday. Envases rose 7.6 percent to 380 pesos.

Vina Concha y Toro SA (CONCHA CC): Chile’s largest wine exporter said it will ask shareholders to vote Dec. 18 on a plan to sell $45 million in new stock to existing shareholders. Concha y Toro also plans to sell five- and 21-year bonds denominated in inflation-adjusted units worth as much as $129 million today, it said in a filing on the securities regulators’ Web site yesterday. Concha y Toro fell 3.3 percent to 1,000 pesos.

Mexico

Grupo Carso SAB (GCARSOA1 MM): The industrial and retail group controlled by Carlos Slim said it will invest $800 million in a retail and residential complex in Mexico City. The complex will house stores and 430 apartments, Grupo Carso said in a statement yesterday. Carso rose 0.4 percent to 31.70 pesos.

Read more...

U.S. Stock Futures Fall, Indicate S&P 500 May Trim Weekly Gain

By Daniela Silberstein

Nov. 28 (Bloomberg) -- U.S. stock futures fell, indicating the Standard & Poor’s 500 Index may trim its biggest weekly gain since 1974, as lower oil dragged down energy producers.

Chevron Corp. lost 1.5 percent in Germany as crude slid on speculation a potential OPEC production cut may fail to outweigh declining fuel demand. Intel Corp. retreated 2.4 percent after its European rival STMicroelectronics NV cut its sales forecast. Wal-Mart Stores Inc. declined as U.S. retailers discounted merchandise as much as 70 percent to counter what may be the weakest holiday shopping season in six years.

The S&P 500 surged 11 percent this week as the Federal Reserve committed as much as $800 billion to help resuscitate lending markets and investors speculated President-elect Barack Obama’s economic team will bolster growth. The index has still tumbled 43 percent from its October 2007 record as credit- related losses and writedowns at global financial companies approach $1 trillion. Exchanges were shut yesterday for the Thanksgiving holiday.

“After a lot of good days a backlash wouldn’t be surprising,” said Peter Braendle, who helps oversee $48 billion at Swisscanto Asset Management AG in Zurich. “The lower oil price is a relief for a lot of industries but there are also sectors that suffer.”

Futures on the S&P 500 expiring in December fell 1 percent to 878.3 at 12:44 p.m. in London. Dow Jones Industrial Average futures slid 0.6 percent to 8,644, while Nasdaq-100 Index futures lost 1.3 percent to 1,180. Trading on U.S. exchanges will end at 1 p.m. today.

Weekly Performance

This week’s rally in U.S. stocks helped push the MSCI World Index of 23 developed markets up 11 percent since Nov. 21, the steepest weekly advance since data began in 1970.

Europe’s Dow Jones Stoxx 600 Index fell for the first time in five days today as STMicroelectronics, the region’s largest semiconductor maker, said fourth-quarter revenue and gross margin will miss forecasts after a slowdown in demand from the wireless, automotive and computer peripherals industries.

President-elect Barack Obama yesterday said the U.S. faces a “time of great trial” and an economic recovery won’t come from “policies and plans alone.”

“It will take the hard work, innovation, service and strength of the American people” to end the financial crisis, he said yesterday in his weekly radio address.

Chevron, Oil

Chevron, the second-largest U.S. oil company, retreated 1.5 percent to $78.76. Crude oil for January delivery dropped 1.8 percent to $53.48 a barrel in New York. OPEC members may consider a reduction at their meeting this weekend in Cairo to stabilize the market, Shokri Ghanem, chairman of Libya’s National Oil Corp., said yesterday.

Concerns about oil consumption have increased after reports showed the U.S. economy slowed and consumer spending fell. Gasoline demand dropped 1.3 percent from last week, the Energy Department said in its weekly report.

Wal-Mart, the world’s largest retailer, decreased 0.4 percent to $56.44. Individuals may spend an average of $616 on holiday gifts this year, down 29 percent from a year earlier, according to a Gallup Inc. poll. That raises the pressure on chains facing declining consumer confidence and the prospect of a recession.

‘Black Friday’

Retailers promoted “doorbuster” deals to attract customers today, the day traditionally called “Black Friday.” The day after Thanksgiving is considered to be when retailers start to make their annual profit, having paid off their costs from sales earlier in the year.

Intel, whose chips run more than three-quarters of the world’s computers, sank 2.4 percent to $13.64.

STMicroelectronics said sales will be $2.2 billion to $2.35 billion, down 13 percent to 18 percent from $2.7 billion in the previous quarter. The company had predicted sales being unchanged or falling 8 percent.

To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.

Read more...

Chesapeake Energy, MGM, Tenet Healthcare: U.S. Equity Preview

By Whitney Kisling

Nov. 28 (Bloomberg) -- The following companies may have unusual price changes in U.S. trading today. Stock symbols are in parentheses, and share prices are as of 7:50 a.m. in New York, unless otherwise specified.

ArcelorMittal (MT US) slipped 10 percent to $22.91. The world’s biggest steelmaker will lay off 490 workers at its Burns Harbor, Indiana, steel plant, almost 2,000 fewer than originally planned. The company also said yesterday it may cut up to 9,000 jobs, or 3 percent of its global workforce, as demand slumps.

U.S. Steel Corp. (X US), the largest U.S.-based steelmaker by sales, fell 2.3 percent to $29.21.

Chesapeake Energy Corp. (CHK US) lost 11 percent to $18.02. The second-biggest independent U.S. producer of natural gas said it will seek to raise about $2 billion to finance projects and acquisitions by selling shares.

Infineon Technologies AG American depositary receipts (IFX US) lost 14 percent to $2.25. Europe’s second-biggest maker of semiconductors asked for German government aid after semiconductor prices dropped and competitor STMicroelectronics NV cut its forecast. The request is under consideration until the end of the year.

MGM Mirage (MGM US) added 1.6 percent to $11.98 in trading after the official close of markets on Nov. 26. The casino company majority-owned by billionaire Kirk Kerkorian said Terrence Lanni, the departing chairman and chief executive officer, also will step down from the company’s board. Lanni announced his resignation as CEO on Nov. 13 after questions about his post-graduate education surfaced.

Tenet Healthcare Corp. (THC US) gained 3.4 percent to $1.22 in trading after the official close of markets on Nov. 26. The Dallas-based hospital chain was raised to “neutral” from “sell” at UBS AG.

To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net

Read more...

European Stocks, U.S. Index Futures Drop; Asian Shares Advance

By Michael Patterson

Nov. 28 (Bloomberg) -- European stocks declined, trimming the MSCI World Index’s biggest weekly gain on record, as STMicroelectronics NV cut its sales forecast and lower oil and metals prices weighed on commodity producers. Asian shares rose, while U.S. index futures dropped.

STMicroelectronics, Europe’s largest chipmaker, sank 5.8 percent, dragging down rivals Infineon Technologies AG and Intel Corp. StatoilHydro ASA retreated 2.9 percent and Anglo American Plc lost 4.4 percent as crude slid below $53 a barrel and copper fell more than 2 percent. Komatsu Ltd. increased 6.9 percent in Tokyo on speculation China’s interest-rate cut this week will boost demand for its excavators.

Europe’s Dow Jones Stoxx 600 Index slipped 1 percent to 201.68 at 12:22 p.m. in London, limiting the measure’s rebound from a five-year low on Nov. 21 to 11 percent. Raw-materials producers, insurers and banks led the gain this week on speculation government stimulus packages in Europe and the U.S. will cushion economies from the financial crisis. The index is still down 9.2 percent in November.

“I am not in the camp saying the world is completely going to end,” Andy Lynch, who oversees about $10 billion as a fund manager at Schroder Investment Management Ltd. in London, said in an interview on Bloomberg Television. “Monetary policy and fiscal policy is being eased aggressively, but it won’t have an effect in the next six months.”

The rally in global stocks this week pushed the MSCI World Index up 11 percent, poised for the biggest weekly gain since record began in 1970. The gauge of 23 developed markets has dropped 7.4 percent this month and is down 45 percent in 2008.

Asia, U.S. Futures

The MSCI Asia Pacific Index rose 1.5 percent. Futures on the Standard & Poor’s 500 Index expiring in December decreased 0.9 percent as Exxon Mobil Corp. dropped.

U.S. exchanges were closed yesterday for the Thanksgiving holiday and will be open for a shortened trading session today. The S&P 500 has advanced 11 percent since Nov. 21.

The Bombay Stock Exchange Sensitive Index climbed 0.7 percent in the first day of trading after India’s first terrorist attack against foreigners. Exchanges were shut yesterday after militants stormed into the Taj Mahal Palace and Tower hotel and the Oberoi Trident complex. At least 121 people were killed and 279 injured.

The Dubai Financial Market General Index lost 34 percent this month and Bulgaria’s SOFIX Index retreated 26 percent for the steepest declines among 90 benchmark indexes tracked by Bloomberg. Ukraine’s PFTS Index added 14 percent and China’s CSI 300 Index increased 10 percent for the biggest gains.

STMicroelectronics

STMicroelectronics slid 5.8 percent to 5.13 euros today. The company said revenue will be $2.2 billion to $2.35 billion, down from $2.7 billion in the previous quarter. That equals a decline of 13 percent to 18 percent, the company said. An earlier prediction was that sales would be unchanged to down 8 percent.

Intel, the world’s largest chipmaker, fell 1.1 percent to $13.82 in German trading. Infineon, Europe’s second-biggest maker of semiconductors, dropped 7 percent to 1.795 euros.

Crude oil for January delivery sank as much as $1.82, or 3.3 percent, to $52.62 a barrel in New York on speculation a potential OPEC production cut to support prices may fail to outweigh declining fuel demand amid the global recession.

StatoilHydro, Norway’s largest oil and gas company, retreated 2.9 percent to 119.5 kroner and Total SA slipped 1.8 percent to 41.40 euros. Exxon Mobil Corp., the world’s biggest oil producer, fell 1.4 percent to $79.72 in German trading.

Anglo American, which mines copper and platinum, lost 5.5 percent to 1,486 pence. Freeport-McMoRan Copper & Gold Inc. of the U.S. retreated 1.5 percent to $24.95 in German trading.

Metal Prices

Copper declined 2.5 percent on the London Metal Exchange, while platinum, nickel, tin and zinc also dropped.

In Asia, Komatsu gained 6.9 percent to 1,144 yen. Aluminum Corp. of China, the country’s largest producer of the metal, rose 4.9 percent to HK$3.46. China’s central bank cut interest rates by the most in 11 years, three weeks after the government announced a stimulus plan worth more than $500 billion.

Royal Bank of Scotland Group Plc investors took 0.2 percent of shares offered in the U.K.’s biggest bank bailout, leaving the government with almost 20 billion pounds ($31 billion) of stock and a majority stake. Investors bought almost 56 million shares at 65.5 pence apiece, the bank said. The U.K. government, which underwrote the offering, will buy the remaining ordinary shares for a total stake of 58 percent. The shares dropped 3.3 percent to 53.2 pence today.

Commerzbank AG climbed 4.9 percent to 7.22 euros after Germany’s second-biggest lender sped up its takeover of domestic competitor Dresdner Bank by as much as a year in a revised purchase valued at 5.1 billion euros ($6.6 billion).

U.S. retailers opened their doors at midnight and discounted merchandise as much as 70 percent to counter what may be the weakest holiday shopping season in six years. Individuals may spend an average of $616 on holiday gifts this year, down 29 percent from a year earlier, according to a Gallup Inc. poll.

To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.

Read more...

Nikkei gains as China hopes, Kyocera offset Panasonic

* Nikkei up 7.6 pct on week, best week in a month

* Nikkei loses 0.75 pct in November, best month since May

* Shippers and trading firms rise on China hopes

* Panasonic tumbles on outlook cut, Kyocera soars on buyback

* Market players gloomy long-term, rises seen limited (Adds stocks, details)

By Elaine Lies

TOKYO, Nov 28 (Reuters) - Japan's Nikkei average climbed 1.7 percent on Friday for its best week in a month on strengthening expectations that an aggressive Chinese interest rate cut may fight a slowing economy there, boosting shippers and trading houses. Electronic parts maker Kyocera Corp (6971.T: Quote, Profile, Research, Stock Buzz) soared 17 percent on a share buyback, countering an 11 percent tumble by Panasonic Corp (6752.T: Quote, Profile, Research, Stock Buzz) after the plasma TV maker slashed its outlook, but otherwise bargain-hunting dominated in thin trade.

Though U.S. markets were closed on Thursday for a holiday, four consecutive days of rises for the Dow were also underpinning sentiment, despite a fresh deluge of bad domestic economic data.

"Reassurance is spreading among investors based on four days of rises by the Dow and the China rate cut, which brings hope that the slowing of its economy may be stopped," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

"But economic fundamentals, especially in Japan, are bad, and the bear market sentiment continues. This is just a temporary break for the bear market."

The benchmark Nikkei .N225 gained 138.88 points to 8,512.27, its highest close in over a week, while the broader Topix .TOPX was up 0.7 percent to 834.82.

The Nikkei climbed 7.6 percent on the week for its best weekly performance in a month. It lost 0.75 percent in November, its best month since May.

A monthly Reuters survey found that Japanese retail investors became slightly less pessimistic about domestic equities in November, seeing some buying opportunities in undervalued stocks after three months of record-low investor sentiment. [ID:nT175967]

Industrial production dropped sharply in October and manufacturers warned of record falls in coming months, with household spending also falling. [ID:nT133784]

But market players shrugged off the gloomy news as expected and said their focus was turning to Friday's launch of the Christmas sales season in the United States.

DARK CHRISTMAS?

"In 2002, Christmas sales were poor, which meant U.S. stocks didn't rise the way they usually would before the end of the year," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

"The same thing could well happen this year, with a knock-off effect on the Nikkei," he added.

He forecast a Nikkei rise for the rest of the year to 9,400 at best. The Nikkei closed at 15,307.78 for 2007.

Panasonic, the world's No.1 plasma TV maker, dived 10.9 percent to 1,144 yen after cutting its annual net profit forecast by 90 percent and announcing plans to restructure as the global financial crisis dampens sales of TVs and other electronics. [ID:nLR132843]

But Kyocera climbed 17.3 percent to 5,960 yen after saying on Thursday it will buy back up to 38 billion yen worth of its own shares, or 4.2 percent of those outstanding.

On Wednesday, China cut interest rates by the biggest margin in 11 years, and the European Union plotted a 200 billion euro ($257.6 billion) stimulus plan as central banks and governments acted to jolt the world out of a deepening slowdown. [ID:nN26340386]

Trading houses surged on hopes that a better Chinese economy would boost commodities demand, with Mitsui & Co (8031.T: Quote, Profile, Research, Stock Buzz) climbing 8.3 percent to 846 yen and Itochu Corp (8001.T: Quote, Profile, Research, Stock Buzz) gaining 9 percent to 483 yen. Marubeni Corp (8002.T: Quote, Profile, Research, Stock Buzz) rose 7.7 percent to 334 yen.

Mitsui O.S.K. Lines (9104.T: Quote, Profile, Research, Stock Buzz) and other shipping companies also rose on China hopes, helped by bargain-hunting by investors eager to snap up shares in the beaten-down sector.

Mitsui O.S.K. jumped 6.1 percent to 507 yen, while Nippon Yusen (9101.T: Quote, Profile, Research, Stock Buzz), Japan's largest shipping firm, rose 5.3 percent to 517 yen. Kawasaki Kisen (9107.T: Quote, Profile, Research, Stock Buzz) rose 5.2 percent to 384 yen.

Trade fell off slightly, with 1.97 billion shares changing hands on the Tokyo exchange's first section compared to last week's 2.1 billion.

Advancing shares outnumbered declining ones by 2 to 1. (Reporting by Elaine Lies; Editing by Edwina Gibbs)

Read more...

HK shares jump 2.5 pct to take weekly gain to 9.7 pct

* Shares rise for 4th day after China rate cuts

* Brokers expect strong Dec; see HSI at 16,000-17,000 pts

* Commodity counters rise on steady demand hopes

(Updates to close)

By Parvathy Ullatil

HONG KONG, Nov 28 (Reuters) - Hong Kong shares rose 2.5 percent on Friday, as aggressive rate reductions in China and cheap valuations of local blue chips pushed the main index into its fourth straight day of gains.

The main index soared 9.7 percent this week, boosted by the U.S. government's latest rescue plan aimed at boosting consumer lending, and China's unexpected interest rate bonanza. The index was little changed for the month.

"After the U.S. announced another bailout plan and China announced big rate cuts, there is a feeling among investors that the credit crunch may be over and the worst of the current global financial turmoil may be behind us," said Alex Tang, research director with Core-Pacific Yamaichi International.

"There is also a feeling that December may be a month of gains, with the Hang Seng Index pushing back up to 16,000-17,000 points. Hong Kong shares are really underweight now."

A 50 percent plunge on the main index has left valuations of blue-chip counters languishing at 10-year lows, their cheapest since the Asian financial crisis.

The benchmark Hang Seng Index .HSI ended the session up 336.18 points at 13,888.24.

Mainboard turnover shrunk to HK$42.4 billion from HK$50.2 billion on Thursday.

Firmer global oil prices ahead of an OPEC meeting and expectations of steady demand from the mainland following this week's aggressive interest rate cuts supported gains in commodity counters.

Offshore oil specialist CNOOC (0883.HK: Quote, Profile, Research, Stock Buzz) jumped 5.8 percent, while top miner China Shenhua (1088.HK: Quote, Profile, Research, Stock Buzz) rallied 7.3 percent.

The China Enterprises Index of top locally listed mainland Chinese firms .HSCE rose 1.7 percent to 7,238.01, led by a 4.3 percent gain in No.2 lender Bank of China (3988.HK: Quote, Profile, Research, Stock Buzz) after a 1 percentage point reduction in the reserve requirement at large Chinese banks.

China's higher-than-expected 1.08 percent interest rate cut sent Guangzhou R&F Properties, a property developer with a relatively high gearing ratio, soaring 15.5 percent, to notch up a whopping 41 percent gain this week. The stock is still down 89 percent from its peak, scaled in November 2007, amid falling property prices in southern China.

Talk of more rate cuts and stimulus measures also kept interest in the battered sector alive.

"There is increasing market speculation that China may introduce an income tax rebate for home purchases as part of the next round of policy stimulus," said Goldman Sachs' Yi Wang.

HK PROPERTIES EXTEND GAINS

Shares of Hong Kong property developers, which fell to five-year lows last week, extended gains on Friday, following positive recommendation changes from major brokerage houses this week.

Wharf Holdings (0004.HK: Quote, Profile, Research, Stock Buzz) added 15 percent, taking its total gains since Wednesday, when Goldman Sachs added the stock to its conviction buy list, to 25 percent.

Another Hong Kong-based conglomerate with interests in the property sector, Swire Pacific (0019.HK: Quote, Profile, Research, Stock Buzz), surged 10.2.

Sun Hung Kai Properties (0016.HK: Quote, Profile, Research, Stock Buzz) leapt 6.7 percent. Hong Kong's biggest developer sold all of its first batch of 20 luxury units at Shatin, in Hong Kong's new territories, within two hours last night, the South China Morning Post said, citing market sources.

Rival Cheung Kong (0001.HK: Quote, Profile, Research, Stock Buzz) gained 4.1 percent. The company said on Thursday its Hong Kong flat sales so far this year stood at a record $3.6 billion and limited supply of new flats should keep recent price falls in check. [ID:nHKG166713]

While the laggards played catch-up, this week's big gainers saw some profit taking, with China Construction Bank (0939.HK: Quote, Profile, Research, Stock Buzz) closing 2.6 percent lower and top bank ICBC <1398.hk>



Read more...

European shares dip in early trade as oils fall

LONDON, Nov 28 (Reuters) - European shares dipped in early trade on Friday as energy stocks slipped, offsetting gains in miners, with investors training their sights on eurozone inflation data and on a key oil producers' meeting over the weekend.

The FTSEurofirst 300 index of top European shares was down 0.3 percent at 850.04 points, having risen 11.6 percent this week.

But the index is still trading down 8.5 percent on the month so far and down 44 percent year to date, reflecting a credit crisis that has piled up losses at major banks and tipped major economies into recession.

Oil shares were lower, with BP (BP.L: Quote, Profile, Research, Stock Buzz), Total (TOTF.PA: Quote, Profile, Research, Stock Buzz) and Shell (RDSa.AS: Quote, Profile, Research, Stock Buzz) falling 0.7-1.3 percent as crude CLc1 fell nearly $1 a barrel to just under $53.50.

Mining stocks were higher, with BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz) rising 3 percent, Vedanta (VED.L: Quote, Profile, Research, Stock Buzz) up 2.8 percent and Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) rose 2 percent.

The Bank of England the European Central Bank are set to announce rate decisions next week, but analysts said that central bank moves would take time to stabilise markets.

"Interest rate cuts are not going to immediately impact on financial markets, as far as I'm concerned. Whether it's equity markets or other markets, it's going to take time," said Neil Parker, a strategist at the Royal Bank of Scotland.

Investors focused on euro zone inflation data due at 1000 GMT and an OPEC meeting over the weekend.

"We're not convinced this will establish a consensus to reduce output, but it is really going to be laying the groundwork. There does seem to be a building consensus to reduce supply, with calls from Venezuela and Iran that they would like to see prices 10 to 15 percent higher than currently," Parker said.

(Reporting by Nicholas Vinocur and Sitaraman Shankar)

Read more...

Euro Open: US Dollar Under Pressure As Risk Sentiment Pushes Higher

Daily Forex Fundamentals | Written by DailyFX | Nov 28 08 08:47 GMT |

The Euro climbed steadily higher overnight and the British Pound was not far behind as top Asian stock markets pushed higher despite a swath of dismal Japanese economic data. Equity index futures in Europe and the US point higher, suggesting the US dollar is likely to remain on the defensive. Key Overnight Developments Japanese Economic Indicators Continue to Sink Lower Euro, Pound Push Higher in Thin Holiday Trading The Euro climbed steadily higher overnight, topping the 1.29 once again to reach as high as 1.2956 before correcting into the 1.2930s. The British Pound was a bit late to the party: sterling spent most of the session in a well-defined 30-pip range but managed to pick up steam late into Asian market hours to retake the 1.54 level. Technical positioning points to a bullish correction in EURUSD and GBPUSD in the near term before the dominant down trend regains momentum. Asia Session Highlights Recession was on full display in the barrage of Japanese economic data that hit the tape overnight. While the Jobless Rate declined to 3.7% in October, it was hardly an improvement: by definition, the metric measures those looking for work but are not able to find it. The improvement in the headline figure this time around occurred because people stopped looking and thereby were not included in the count. Indeed, the ratio of available vacancies to seeking applicants dropped to 0.80, the lowest in over four years. Businesses are clearly cutting back as global demand dwindles: Industrial Production slowed -7.1% in the year to October, a record low. With firms scaling back their operations and trimming staff, it is no wonder that Household Spending declined again in October, down -3.3% from the preceding month, while the annualized Retail Trade metric declined to the lowest in 15 months. As economists predicted, the sluggish pace of economic activity has dampened inflation, with the Consumer Price Index registering at just 1.7% in October. The pace of price growth has declined a hefty 27% since peaking with commodity prices in July. Japan sank in recession having posted negative GDP results in the second and third quarters and the road back to prosperity is an uncertain one. We have noted for some time now that policymakers are quickly running out of alternatives to offer meaningful stimulus to the economy: monetary measures have little scope with interest rates already within a hair of 0% and fiscal stimulus could be hit-or-miss given the Japanese consumer's infamous proclivity to favor saving over spending. This means that proposals of intervention in the currency market to suppress the Yen and boost the export sector (a stand-by crutch for Japanese economic growth) are likely starting to make the rounds among officials. Short of this drastic course of action, the world's second largest economy has little left but hope that China's bout of sweeping monetary easing and increasing policy ingenuity in the US will bring a rebound in Japan's main trade partners sooner rather than later. Euro Session: What to Expect The European economic docket looks painfully predictable in the European session. French Producer Prices are set to issue another down reading, this time shrinking -0.2% in October to bring the annualized rate to 5.1%. An estimate of the broader Euro Zone Consumer Price Index is expected to see the currency bloc's headline inflation gauge drop to 2.5% in the year to November, pointing to a staggering 40% slowdown in just 4 months and the lowest reading in over two years. Traders will hardly be surprised by either reading: the collapse in commodity prices and acute slowdown in the region's economic growth has long taken the wind out of the sails of price growth, with monetary policy expectations focused on magnitude of forthcoming rate cuts rather than their likelihood. To that effect, the market is pricing in at least a 0.50% cut when the ECB meets in early December and between 125-150 basis points in easing over the next 12 months. The situation in Switzerland is expected to fare little better as the KOF Leading Indicator is seen dropping to 0.20, a new 5-year low. The metric is an index of six leading indicators and forecasts how the Swiss economy is expected to perform in the next six to nine months. On balance, risk trends are likely to remain in focus across forex markets. The Euro and the British Pound rose overnight as top Asian stock markets pushed higher. European equity index futures are firmly in positive territory ahead of the opening bell, suggesting the US dollar will likely remain under pressure. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.

Read more...

Markets Going Nowhere In A Hurry So Far In Thin Holiday Trading

Daily Forex Fundamentals | Written by Saxo Bank | Nov 28 08 08:24 GMT |

Forex Market Update: Markets Going Nowhere In A Hurry So Far In Thin Holiday Trading. Big Week Up Next Week With Multiple Rate Announcements And US Employment Report Japan small business confidence plunges to lowest level in history of survey, but JPY sees little reaction LATEST HEADLINES New Zealand Oct. Building Permits fell -21.9% MoM vs. +11.1% in Sep. Japan Nov. Nomura/JMMA Manufacturing PMI fell to 36.7 from 42.2 in Oct. Japan Oct. Jobless Rate fell to 3.7% vs. 4.2% expected and 4.0% in Sep. Japan Oct. Household Spending fell -3.8% YoY vs. -3.3% expected and -2.3% in Sep. Japan Oct. National CPI out at 1.7% YoY as expected Japan Oct. Industrial Production fell -7.1% YoY vs. -6.6% expected and +0.2% in Sep. Japan Oct. Retail Trade fell -0.6% YoY vs. -1.0% expected UK Nov. GfK Consumer Confidence rose to -35 vs. -37 expected and -36 in Oct. Australia Private Sector Credit Growth was +9.7% YoY vs. 9.5% expected and 10.0% in Sep. Japan Nov. Small Business Confidence fell to 35.1 Japan Oct. Housing Starts out at 19.8% YoY vs. 30.0% expected THEMES TO WATCH - UPCOMING SESSION Sweden Q3 GDP (0830) Sweden Oct. Retail Sales (0830) EuroZone Oct. Unemployment Rate (1000) EuroZone Nov. CPI Estimate (1000) Switzerland KOF Swiss Leading Indicator (1030) UK Nov. CBI Distributive Trades Report (1100) Canada Q3 Current Account (1330) Canada Oct. Industrial Product Price and Raw Materials Price Index (1330) US Nov. NAPM Milwaukee (1500) Australia Nov. AiG Performance of Manufacturing Index (Sunday 2230) China Nov. Manufacturing PMI (Monday 0100) Market Comments Our warnings about potential volatility here as we come into month end during thin US markets have so far proved unfounded, as markets have barely moved over the last 24 hours despite a flurry of very ugly data out of the EuroZone yesterday (cratering November confidence levels) and Japan overnight (we looked at household spending, industrial production and small business confidence - we're note sure what that strange jobless rate number is all about). The tendency remains for equity averages to tick higher and risk aversion generally showing signs of fading slightly, though nothing looks convincing so far. Still, beware the end-of-month fix today, which could create a bit of hectic activity. US markets are open for a half day of trading today. The 'Thanksgiving Surprise' of 2006 happened on a Friday, when EURUSD zoomed through 1.3000 for the first time in a long time. Though looking at the context of the 2006 move, it had been preceded by a very large move on Wednesday of the same week that was clearly applying pressure to the key 1.3000 resistance level. By strange coincidence, the 1.3000 level is also in play here two years later, and it appears that Euro is working itself into an either/or situation again. We have made our bearish view on the EUR fundamentals clear, but let's see if the market is listening...any attempt back through 1.3000 and 1.3080 would put the bearish view on hold until/unless a strong reversal appears. 1.2800 is needed for the bears to get a better technical argument for a further fall. With the ECB meeting next week and EURUSD tracking interest rate differentials relatively well again, we will get a resolution to this soon. Continued attempts by equities to rally and a hawkish ECB would probably send the pair on another wave higher. Our preferred scenario, however, has the ECB finally forced into a more dovish stance, perhaps surprising on the rate cut size (as the overnight rate should clearly have been 125 bps lower than it is currently at least a month ago) and the broader market rolling back over into risk averse mode. In the medium term, we can't conceive of any scenario that spread between European 2-year rates and US 2-year rates (currently around 109 bps vs. 200 bps in mid September and lowest daily close at 90 bps in late October) from shrinking further towards parity. Next week sees a whole slew of central bank announcements and important economic data. The major US data includes the two major ISM surveys and the employment report on Friday, which unfortunately looks like it will be an absolutely terrible one, considering that consensus payroll expectations are already lower than at any point during the 2001 recession. The BOE, ECB, RBNZ and RBA will all announce rate cuts next week as well. More on those next week. Chart: USDCAD USDCAD is a pair we are watching with interest these days with the BCE takeover thrown into chaos. The technicals are caught between conflicting bullish and bearish signals, but a resolution may be coming soon. The pair continues to find support above the 21-day moving average, but needs 1.2420+ for a short term technical break higher to get technical arguments for a rally in gear. Above that, it needs 1.2670+ to remove the idea of a structural double top. To the downside, a close below the 21-day MA could setup a move toward 1.2000/1.1800, though this is not the preferred scenario. Analysis Disclosure & Disclaimer SaxBank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by SaxBank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis dnot occur as anticipated. SaxBank utilizes financial information providers and information from such providers may form the basis for an analysis. SaxBank accepts nresponsibility for the accuracy or completeness of any information herein contained. Any recommendations and other comments in SaxBanks analysis derive from objective fundamental macreconomical and company specific calculations, statistical and technical analysis, and subjective general market assessment. If an analysis contains recommendations tbuy or sell a specific financial instrument, such recommendation should be seen as SaxBanks opinion that the specific instrument will respectively outperform the relevant market or underperform compared tthe market. SaxBanks recommendations should statistically correspond tan even distribution between buy and sell recommendations. The recommendations may expire promptly due tmarket volatility and in general, SaxBank does not anticipate its recommendations tbe valid more than one month. An analysis will be updated if and only if a market development or other issues relevant tthe analysis render a new analysis on the same topic relevant. SaxBanks analysis does not cover any specific financial product over time but only products which SaxBanks strategy team finds it important tcover at any given point in time. In order tprevent conflicts of interest, SaxBank has established appropriate business procedures, incl. procedures applicable tresearch and analysis tensure objective research reports. SaxBanks research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis. SaxBank is under supervision by the Danish Financial Supervisory Authority. SaxBank does not engage in corporate finance activities and accordingly, SaxBanks employees, incl. the persons responsible for an analysis, dnot receive remuneration associated with investment banking transactions.

Read more...

Wakeup Call: Stocks Still Higher Across The Board... But For How Long?

Daily Forex Fundamentals | Written by Saxo Bank | Nov 28 08 08:19 GMT |

Government fixed income is not buying the stocks going higher story and our Top100 Global Stocks CDS Price index is unchanged a record high levels. Calendar Economic Data Releases Country Name Time (GMT) Expectation Prior Comment SW GDP QoQ (3Q) 08:30 -0.2% 0.0% EC Unemployment Rate (OCT) 10:00 7.6% 7.5% SZ KOF Swiss Leading Indicator (NOV) 10:30 0.20 0.35 Earnings Releases Country Name Time (GMT) Expectation Prior Comment GE ThyssenKrupp AG n/a 1,167 What's going on? Stocks still higher across the board… but for how long? Government Fixed Income is not buying the story and our Top100 Global Stocks CDS Price Index is unchanged at record high levels. Commodities showing a rebound as well, but not in energy products. Basic Materials doing well. Today's Euro-Zone Unemployment Rate could be important, but we expect a relatively quiet day. FX FX Daily stance Comment EURUSD 0 Prefer downside, but thin market. 1.2800 is key support short term. 1.2930-70 is resistance. EURJPY 0 Prefer downside eventually. 123.25/50 is first resistance. 122.00 basic support. USDJPY 0 Looks heavy, but still in range. 94.50 first key support. 95.80 is resistance GBPUSD 0 May have topped recently at 1.5533. Needs <> USDCAD + Might wait to move until next week. Break above 1.2420 area is tech trigger. Equities Equities Daily stance Comment DAX + Sell into rallies. Sell at the 4675-4700 levels, target 4550 initially, 4450 finally. S/L at 4750. FTSE + Sell into rallies. Sell at the 4225-4250 levels, target 4142 initially, 4050 finally. S/L at 4350. S&P500 + Nasdaq100 + Nikkei225 + Futures Commodities Daily Stance Comment Gold (XAUUSD) 0 Tight range. Buy above 818. Sell below 812. Keep a $6 stop. Silver (XAGUSD) 0 Tight range. Buy above 10.40. Sell below 10.20. Keep a 20 cents stop. Oil (WBSF9) + Some risk-willingness. Buy at the break of 55 with a stop at 54. Target 58. Analysis Disclosure & Disclaimer Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated. Saxo Bank utilizes financial information providers and information from such providers may form the basis for an analysis. Saxo Bank accepts no responsibility for the accuracy or completeness of any information herein contained. Any recommendations and other comments in Saxo Bank's analysis derive from objective fundamental macro economical and company specific calculations, statistical and technical analysis, and subjective general market assessment. If an analysis contains recommendations to buy or sell a specific financial instrument, such recommendation should be seen as Saxo Bank's opinion that the specific instrument will respectively outperform the relevant market or underperform compared to the market. Saxo Bank's recommendations should statistically correspond to an even distribution between buy and sell recommendations. The recommendations may expire promptly due to market volatility and in general, Saxo Bank does not anticipate its recommendations to be valid more than one month. An analysis will be updated if and only if a market development or other issues relevant to the analysis render a new analysis on the same topic relevant. Saxo Bank's analysis does not cover any specific financial product over time but only products which Saxo Bank's strategy team finds it important to cover at any given point in time. In order to prevent conflicts of interest, Saxo Bank has established appropriate business procedures, incl. procedures applicable to research and analysis to ensure objective research reports. Saxo Bank's research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis. Saxo Bank is under supervision by the Danish Financial Supervisory Authority. Saxo Bank does not engage in corporate finance activities and accordingly, Saxo Bank's employees, incl. the persons responsible for an analysis, do not receive remuneration associated with investment banking transactions.

Read more...