Sydney - Friday - July 3 (RWE Aust Business News) - Global equities encountered a freezing cold reception after the latest unemployment numbers soared, endangering hopes of a quick economic recovery.
Wall Street tumbled 223 points or 2.6% while S&P 500 shed 27 points or 2.9%, the Nasdaq Composite dropped 49 or 2.67% and the 100 index off 35 or 2.37%. The only redeeming feature was the light turnover which showed no conviction that a bearish trend was around to stay. With American Independence Day tomorrow, it is a four day trading week on US markets. The Dow finished 147 points behind, the S&P 500 lost 22, the Nasdaq Composite down 42 and the 100 index off 34.
Treasuries firmed against the weaker stock market with the 10 year cash paper yield down 4 points to 3.49 per cent. It will hold four auctions next week for the first time to sell $73 billion of notes, bonds and inflation-protected securities as the U.S. accelerates debt sales to finance a record budget deficit. The worse-than-expected slide in June non-farm payrolls saw US corporates shed nearly half a million jobs last month, sending the jobless rate up to 9.5 per cent, the highest in nearly 26 years. US non farm payroll numbers posted a loss of 467,00 jobs in June, 100k more than predicted by economists. Unemployment in Europe hit a 10-year high, also dampening hopes of a quick recovery from recession there. Europe's central bank chief warned that although the downturn had eased, weak economic activity would hamper growth for the rest of the year and only a gradual recovery would emerge by mid-2010. In Sweden, the central bank cut rates to 0.25 per cent from 0.50 percent in a surprise move, putting official rates at their lowest since records began in 1907. It also offered 100 billion crowns ($13.2 billion) of loans to banks to foster lending as it sought to reverse its worst recession since the 1940s In Britain, data showed a decline in activity in the construction sector accelerated in June and UK lenders said they did not expect much of a pick-up in demand in the third quarter even though they would make more credit available. The Bank of England's David Miles warned parliament that while the next few quarters could see a rebound, a return to rapid growth was unlikely. In Japan, Economics Minister Yoshimasa Hayashi said he will do his utmost to prevent price falls from persisting in the economy, which is facing its second bout of deflation this decade. In a sharp contrast to weakness in industrialised nations, India's finance ministry said the Asian giant could see growth of around 7 per cent this year and more in coming years if it makes sweeping reforms. Meanwhile, since the economy fell into recession in December 2007, 6.5 million nonfarm jobs have been lost and the unemployment rate has almost doubled. "It looks like the economy was still losing substantial momentum as the second quarter came to a close. "This report is weak across the board," said William Sullivan, chief economist at the JVB Financial Group in Florida. The rise in the U.S. jobless rate to 9.5 from May's 9.4 per cent took it to its highest level since August 1983. In a further indication of weakness, the report showed the length of the average workweek shrunk and wages were flat last month. One analyst describes the labor market as still in a shambles. US businesses have slashed payrolls sharply in an effort to protect their bottom line in the face of a plunge in consumer demand. On the technology front, International Business Machines Corp tumbled 2.2 percent to $102.56 during the session, making the stock the Dow's top drag. Apple Inc, another tech bellwether, slid 1.5 percent to $140.60 and was the Nasdaq's worst weight. In the energy sector, Exxon Mobil Corp shed 2.5 per cent to $68.82 as US front-month crude declined $2.58, or 3.6 percent, to $66.73 a barrel. NRG Energy Inc shares slumped 4.9 percent to $24.78 after Exelon Corp raised its hostile takeover bid for the independent power producer by more than 12 per cent to $7.45 billion, ahead of NRG's annual meeting. Giant retailer, Macy's Inc lost nearly 5 per cent to $11.16, while healthcare giant Johnson & Johnson said it agreed to pay $1 billion for an 18.4 percent stake in Elan Corp plc and will buy most rights to the Irish company's portfolio of experimental drugs to treat Alzheimer's disease. Elan's US-traded shares shot up about 13 per cent to $7.90 on the New York Stock Exchange, while J&J's stock, a Dow component, fell 1.8 percent to $56.04. Data showing US factory orders were better-than-expected in May but overshadowed by the bleak news on the labor market. Concern that international investors would pull back from American financial assets has grown as the U.S. Dollar Index weakened 9 percent since February after Obama and Fed Chairman Ben S. Bernanke committed $12.8 trillion to thaw frozen credit markets and end the recession.
WALL STREET... The Dow Jones Industrial Average index settled 212.82 points lower at 8,291.24 while the S&P 500 index shed 26.04 points to 897.29. The Nasdaq Composite index fell 49.20 points to 1,796.52 and the Nasdaq 100 index lost 35.06 to 1,446.28. Treasuries gained from share weakness with the 10-year note rising 11/32 ticks to 96 30/32 while the yield fell 4 points to 3.49pc. The 30-year bond yield lost 1 point to 4.31pc and the two-year note yield shed 5 points to 0.981pc.
US DOLLAR... is changing hands at 95.91 yen (pre 96.61), against the Euro 1.3959 (1.4150) against sterling 1.6360 (1.6477) and against the Swiss franc 1.0875(1.0749).
AUSTRALIAN DOLLAR... is changing hands at US79.14c compared with US80.29c on yesterday's close. Offshore the Aussie posted a high of US80.48c and low of US79.33c. On the crosses, against the yen it is at 75.97 (78.00) the Euro at 0.5672 (0.5704) and sterling at 48.39 pence (48.97).
EUROPEAN SHAREMARKETS ... London's FTSE 100 slumped 106.44 points to 4,234.27in contrast to a 2.2% rise in the previous session beginning the first quarter of the new financial year. Other European indices followed a similar trend. Paris's CAC-40 dropped 100.59 to 3,116.41, Frankfurt's DAX slid tumbled 187 to 4,718.49 and Zurich slid 117.71 to 5,355.23. On the regionals Amsterdam fell 8 points, Brussels dropped 36, Madrid down 26 and Oslo shed 6 points.
AUSTRALIAN SHARE MARKET... is heading for a shocker today after Wall St's Dow finished 212 points lower or 2.6% lower and the local SPI futures lost 82 point or 2.1pc to 3779 before the physical market opened. Yesterday the ASX 200 rose 3 points to 3877 and the All Ordinaries index edged up a similar amount to 3875. There is no economic data scheduled today. Miners did poorly in London and the US, especially Rio Tinto down 5.7pc after finishing its capital raising while BHP Billiton was also caught the chill winds of selling pressure.
METALS... Spot gold is currently $929.50 oz. The COMEX gold August contract was $10.30 lower at $931.00 oz, the October contract lost $10.50 to $932.30 oz. July silver fell 34.7c to $13.393 oz. July platinum shed $9.90 to $1186.60 oz and July copper fell 2.5c to 229c lb in New York.
London Metal Exchange official cash ask prices were: copper $5006 tonne ($5042), tin $14,490 ($14,460) lead $1708 ($1695) zinc $1549.50 ($1544.50) aluminium $1611 ($1610) and nickel $16,180 ($15,775). The 3-month ask prices were copper $5045 tonne ($5115 tin $14,500 ($14,900) lead $1710 ($1750), zinc $1580($1595), aluminium $1645 (1670) and nickel $16,550 ($16,300).
OIL... August crude fell $2.58 to $66.73 a barrel with a high of $69.74 and a low of $66.50. The Sept contract lost $2,53 to $67.74 a barrel with a high of $70.70 and low of $67.52. Brent ICE for Aug fell $2.14 to $66.65 a barrel with a high of $69.19 and a low of $66.33 barrel.
Reuters CRB index fell 5.31 points to 245.86. ENDS
