05 Nov 2008
* Global equities up 0.1 pct as Obama wins
*
* Wall St points to lower open, Dollar loses early bid
* German fiscal stimulus, US quarterly refunding hit bonds
The regional split was stark, however. European stocks fell for the first time in seven days while
Wall St futures pointed to a lower open after Tuesday's strong gains. The U.S. dollar did the reverse, recovering some of the previous session's heavy losses.
The widely-expected victory for Democrat Obama was confirmed by early results from Tuesday's
Democrats increased majorities in both houses of Congress, but appeared to fall short of the nine extra Senate seats needed to reach a so-called "super majority" of 60 seats that would
give them the muscle to defeat Republican procedural hurdles. The results saw investors take stock of the new political and economic landscape after a week in which global markets have
recovered sharply from credit-related shocks of October as money market strains and extreme volatility eased.
"We've had a long up move but we're not out of the woods and the economic environment continues to deteriorate," said Jeremy Batstone-Carr, private client research head at Charles Stanley.
The overall tone of global markets remained one of stabilisation. But with the
These included gloomy economic data such as Friday's upcoming
plans for a 50 billion euro economic stimulus and heavy
"Obama's honeymoon period will be short-lived faced with the worst economic crisis for several decades and with the fiscal situation having already deteriorated sharply," Calyon analysts said in a note to clients, warning that the size of any new
The October U.S. employment report on Friday will likely highlight the economic challenge facing Obama, with forecasts of non-farm payroll losses of up to a quarter of a million. ADP
Employer Services said on Wednesday private-sector employers alone cut a bigger-than-expected 157,000 jobs during the month.
Many investors, meantime, are looking for the Treasury at 1600 GMT to announce more 10-year note and 30-year bond offerings to fund a welter of new government rescue programmes. The Treasury said on Monday it would need to borrow a record $550 billion in the October-December quarter, including a likely $300 billion in financing for the Federal Reserve's operations.
Crude oil prices more than 3 percent on Wednesday and the dollar recovered some of Tuesday's biggest one-day loss against the euro since the latter's launch in 1999.
The dollar has tended to benefit from extreme global market stress of late due to flows related to the deleveraging of global finance, fund redemptions, some repatriation of
By 1300 GMT, world stocks defined by the MSCI's global index were down 0.1 percent.
The gloomy economic data stream was relentless. Service sector activity in the euro zone touched a fresh decade low in October according to final data released on Wednesday.
The final Markit Eurozone Purchasing Managers' Index for companies ranging from banks to cafes slumped to 45.8 -- the lowest in the survey's 10-year history. It was below the flash
estimate and forecasts and down from September's 48.4.
SECTOR SPECIFIC
While global market movements were largely related to position adjustments after a volatile few weeks, some analysts focused on sectoral impacts.
"There's been a bit of profit taking after the fantastic rise since the market bottomed out last week," said Jim Wood-Smith, head of research at Williams De Broe in
"Obama is seen as anti-big oil so the market is seeing reason to take profit in oil majors."
This concern added to the pressure on energy stocks from the drop in crude oil prices. Royal Dutch Shell, BG Group and Cairn Energy all fell between 2.5 and 4.7 percent.
Pharmaceuticals were the biggest losers on the FTSEurofirst index of leading European stocks, which was down 1.8 percent at 1300 GMT. AstraZeneca , GlaxoSmithKline , Novartis and Sanofi-Aventis down 3.8-4.5 percent.
Ever since former president Bill Clinton's key policy was to reduce the cost of drugs to the consumer, the market has said a Democratic victory is not good for the sector. said Jim
Wood-Smith at William de Broe.
Simon Mather, an analyst at WestLB, said: "The victory of Barack Obama opens the door for accelerating pricing pressure" in the pharma sector.
The financial crisis continued to loom large in
than halved due to higher provisions tied to the upheavals.
HSBC lost 2.9 percent and BBVA was 1.3 percent lower.
But in a reminder of the huge government bill the new
Obama's win <US2YT=RR> <US10YT=RR>.
"The market is bracing itself for a big refunding next week. The Treasury has got a lot to do," said Padhraic Garvey, rate strategist at ING in
European government bond prices <EU10YT=RR> also fell sharply on the German economic stimulus plans and further declines in the
for money market lending rates.
The European Central Bank and Bank of England are expected to to announce deep interest rate cuts on Thursday.
Source : Reuters
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