New Overnight Developments Abroad: WSJ Story on Citi

February 23, 2009

The U.S. federal government will buy up to 40% of Citigroup shares according to the Wall Street Journal. The report lifted bond yields, stocks and oil prices.

The dollar rose 1.6% against the yen, surpassing last week’s high against the Japanese currencies.  The greenback also gained 0.8% against the Swiss franc but lost 1.1% versus sterling and is below last week’s low against the pound.  Net moves in the dollar have been fairly insignificant against the euro, kiwi, loonie and Ozzie dollar. The won advanced for the first time in 11 trading days.

Oil firmed 1.8% to $40.75 per barrel. Gold settled back under $1000, dropping 1.4%.

The yield on ten-year JGB’s edged down a half-point to 1.27%. Gilt and bund yields followed the rise in Treasuries.

The Nikkei closed 0.5% lower. Bourses also fell in Vietnam (3.4%), Australia and New Zealand (1.5% each) and India (2.2%).  But equities did better after the WSJ story broke with gains of 3.8% in Hong Kong, 3.4% in South Korea, 2.8% in China, and 1.2% in Indonesia. In Europe, the German Dax (1.8%), Paris Cac (1.7%) and British Ftse (0.9%) are up, and a likely rise in U.S. stocks at the open is also indicated.

GDP in Thailand sank by 6.1% last quarter, 50% greater than anticipated, and the on-year change swung to minus 4.3% from plus 3.9%.  Exports and investment fell by 8.9% and 3.3%.  The figures cement the likelihood of another Thai interest rate cut on Wednesday.

Italian harmonized consumer prices fell 1.7% last month and rose 1.4% from January 2009. These changes revise down preliminary figures by a tenth.

Consumer prices in Hong Kong firmed 0.3% in January, lifting the 12-month rate to 3.1% from 2.1%. The gain was influenced by the early Lunar New Year.

ECB President Trichet urged tighter regulation of financial institutions and markets, including extended oversight to hedge funds.

British Chancellor Darling indicated much more money will be injected into Northern Rock to help stop the decline in house prices.

The Chicago and Dallas Feds will release their activity indices today. Canadian retail sales figures arrive at 13:30 GMT. Central banks make interest rate announcements, Hungary and Israel.  Their rates are currently at 9.5% and 1.0%.  A rate change is not expected in either case.

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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