New Overnight Developments Abroad: Nikkei Tumbled 11.4% or 1,089 points

October 16, 2008

European and Asian stocks fell sharply further on Thursday. Paris Cac trading 4.0%. German Dax off 2.7%. British Ftse -3.1%.  Stocks down 6.7% in Australia.

In Asia, stocks lost 11.4% in Japan, 9.4% in South Korea, 4.9% in China, 4.8% in Hong Kong, 5.3% in Singapore, 3.2% in Vietnam and 5.2% in the Philippines.

The U.S. dollar lost 1.1% against its Australian and New Zealand counterparts but rose 0.3% against the euro, 0.2% against the Canadian dollar, and 0.1% versus sterling, the yen, and the Swiss franc.  The South Korean won plunged almost 10%.

The yield on 10-year JGB’s was extremely volatile, falling at first to 1.53% but now showing a net uptick of 0.5 basis points at 1.595%.

Oil fell 3.4% to $72.04, less than half its July peak of $147.27.  Gold eased insignificantly to $836/ounce and remains 19% under its 2008 high.

Japan’s Prime Minister Aso complained that U.S. authorities have not done enough to lift financial market confidence.

The monthly Reuters Tankan proxy showed a much lower Japanese diffusion index of -25 in October for manufacturers versus -14 in September but a 1-point improvement to -9 among non-manufacturers.

Emergency funding to fortify the capital of UBS and Credit Suisse was announced by the Swiss government.

The Bank of England shook up its money market operations, launching a discount window facility and a new operational standing facility with a reduced penalty rate.

Early indications suggest that Chinese industrial production slowed further in September.

Don Kohn of the Fed said the worsening banking crisis is mitigating the boost from the round of interest rate cuts.  Bernanke noted that inflation is moderating.  The markets are speculating on a near-term additional round of concerted central bank rate reductions.

Italy’s trade position worsened to a deficit of EUR 2.116 bn in August from a surplus of EUR 2.074 bn in July and a deficit of EUR 0.687 bn a year ago.

Germany’s Chamber of Commerce released its triannual business survey showing weaker current conditions and future expectations than back in June.

McCain came out swinging in his final debate with Obama, but pundits doubt that the more aggressive strategy will turn Obama’s lead in opinion polls.

Authorities in Hong Kong insisted again that there is no plan to unpeg the HK$ from the USD.

Markets await a slew of U.S. data at the open, including CPI, TIC, energy inventories, and industrial production.


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