Post by unlawflcombatnt on Nov 8, 2007 6:38:05 GMT -6
from Reuters:
Global shares pressured by fresh credit fears
Nov 8, 2007 7:05am EST
"World stocks hit a two-week low on Thursday while the dollar remained vulnerable near the previous day's record lows as Wall Street tumbled on a fresh series of negative news on the U.S. mortgage and financial industry.
U.S. stocks, after tumbling 3% on Wednesday, were set for a weak open. European shares cut losses after BHP Billiton confirmed market speculation it had approached rival Rio Tinto about a possible combination.
Oil resumed its march towards $100 a barrel, while gold rose towards the previous day's 28-year peak.
Credit concerns intensified on Wednesday after a probe of the home loan industry drew in top U.S. mortgage finance firms. Washington Mutual <WM.N, the largest U.S. savings and loan company, warned the housing slump will extend into 2008.
Furthermore, Morgan Stanley said it suffered a $3.7 billion loss from its U.S. subprime exposure while General Motors posted its largest quarterly net loss ever.
The credit crunch of the past 3 months, stemming from the fallout in U.S. subprime mortgages, has hit consumer sentiment and threatened to weaken corporate profits and derail growth in the world's largest economy.
Strength in gold and oil prices are also fanning inflation concerns, which are negative for risky assets.
"The major fears are concentrated in two areas: the inflation threat from higher commodity prices and the fact that there's a lack of credibility in the banks' reports," said Alain Bokobza, head of strategy at Societe Generale in Paris.
MSCI's main world equity index was down 0.7 percent, having earlier hit the two-week low. The index, however, is still up 11 percent since January and not so far away from last week's record high....
U.S. stock futures were down around 0.1 percent.
Asian stocks on a MSCI measure fell 3 percent while emerging stocks fell 2 percent.
OIL RESUMES RALLY
The dollar traded at $1.4662 per euro after hitting record lows of $1.4730 on Wednesday. It also held close to all-time troughs against a basket of major currencies.
Expectations for further U.S. interest rate cuts from the current 4.5 percent have weighed on the dollar.
The Bank of England and European Central Bank announce their rate decisions on Thursday. Both central banks are expected to hold rates steady, at 5.75 and 4.0 percent respectively....
U.S. light crude was erased earlier losses to stand up 0.8 percent at $97.14 a barrel. Oil surged towards $99 for the first time in the previous session.
"More and more investor money has flowed in to commodities as the dollar has continued to weaken. These flows have reinforced the on again-off again negative correlation between oil and the dollar," JP Morgan said in a note to clients.
Gold stood at $832.80 an ounce, after hitting $845.40, its highest in nearly three decades, on Wednesday.
Gold is up more than 30 percent on the year and has soared since the trouble took root in U.S. credit markets, with the metal variously seen as an inflation hedge or a safe haven in all the turmoil."
Global shares pressured by fresh credit fears
Nov 8, 2007 7:05am EST
"World stocks hit a two-week low on Thursday while the dollar remained vulnerable near the previous day's record lows as Wall Street tumbled on a fresh series of negative news on the U.S. mortgage and financial industry.
U.S. stocks, after tumbling 3% on Wednesday, were set for a weak open. European shares cut losses after BHP Billiton confirmed market speculation it had approached rival Rio Tinto about a possible combination.
Oil resumed its march towards $100 a barrel, while gold rose towards the previous day's 28-year peak.
Credit concerns intensified on Wednesday after a probe of the home loan industry drew in top U.S. mortgage finance firms. Washington Mutual <WM.N, the largest U.S. savings and loan company, warned the housing slump will extend into 2008.
Furthermore, Morgan Stanley said it suffered a $3.7 billion loss from its U.S. subprime exposure while General Motors posted its largest quarterly net loss ever.
The credit crunch of the past 3 months, stemming from the fallout in U.S. subprime mortgages, has hit consumer sentiment and threatened to weaken corporate profits and derail growth in the world's largest economy.
Strength in gold and oil prices are also fanning inflation concerns, which are negative for risky assets.
"The major fears are concentrated in two areas: the inflation threat from higher commodity prices and the fact that there's a lack of credibility in the banks' reports," said Alain Bokobza, head of strategy at Societe Generale in Paris.
MSCI's main world equity index was down 0.7 percent, having earlier hit the two-week low. The index, however, is still up 11 percent since January and not so far away from last week's record high....
U.S. stock futures were down around 0.1 percent.
Asian stocks on a MSCI measure fell 3 percent while emerging stocks fell 2 percent.
OIL RESUMES RALLY
The dollar traded at $1.4662 per euro after hitting record lows of $1.4730 on Wednesday. It also held close to all-time troughs against a basket of major currencies.
Expectations for further U.S. interest rate cuts from the current 4.5 percent have weighed on the dollar.
The Bank of England and European Central Bank announce their rate decisions on Thursday. Both central banks are expected to hold rates steady, at 5.75 and 4.0 percent respectively....
U.S. light crude was erased earlier losses to stand up 0.8 percent at $97.14 a barrel. Oil surged towards $99 for the first time in the previous session.
"More and more investor money has flowed in to commodities as the dollar has continued to weaken. These flows have reinforced the on again-off again negative correlation between oil and the dollar," JP Morgan said in a note to clients.
Gold stood at $832.80 an ounce, after hitting $845.40, its highest in nearly three decades, on Wednesday.
Gold is up more than 30 percent on the year and has soared since the trouble took root in U.S. credit markets, with the metal variously seen as an inflation hedge or a safe haven in all the turmoil."