US Markets Fundamental Outlook
Lehman Announcement Will Dictate Market Sentiment
Wednesday, 10 September 2008 13:21:43 GMT
Written by John Rivera, Currency Analyst
The major indices drop on the concerns that Lehman Brothers was in trouble after it appeared the potential deal with Korean development Bank seemed dead. The markets concern prompted the beleaguered bank to announce its third quarter results a week a head of schedule.
US Session: What to Watch For
* Lehman Reports Better Than Expect
* OPEC To Cut Production
* MBA Montague Applications On Tap
Lehman Announcement Will Dictate Market Sentiment
The major indices drop on the concerns that Lehman Brothers was in trouble after it appeared the potential deal with Korean development Bank seemed dead. The markets concern prompted the beleaguered bank to announce its third quarter results a week a head of schedule. The investment bank reported that they intend to spin off their commercial real estate business and will have limited exposure going forward, after they realized losses of $460 million in the third quarter. . The securities firm also reported that it would cut its dividend by five cent which will save it $450 million. They also made it clear that they are for sale, which may bring relief to the markets. However, a lack of a major announcement could keep concerns lingering and cause more losses for the banking sector. MBA mortgage applications are the only economic release on tap for which will have minimal impact. Meanwhile, OPEC has announced that it will ask members to cut production and strictly adhere to previous established quotas, which has stopped oil’s march towards $100 a barrel.
Dow Jones 11230.73
Dow futures reversed on the Lehman news from positive to negative, which shows that the announcement failed to alleviate fears, and may lead to another down day by the blue chips. OPEC defending $100 a barrel could lead to energy stock trading higher , which could add support to the index
Tech stocks continued to take a beaten as the Nasdaq continued its downward trend. Apple’s “Let’s Rock” event failed to inspire investors as Steve Jobs continued to appear as his health may be an issue and the product releases lack the punch that Apple investors are accustomed. Therefore, we could see the stock fall further today dragging the overall index with it.
S&P 500 1224.51
If financial continue to sink if the Lehman news fails to inspire confidence, then we may see the broader index continuing its losses from yesterday. Oil prices firming may also weigh on airlines and automakers.
European Session Key Developments
* EC Lowers Growth
* U.K. Trade Deficit Widens
* French industrial production rebounds
European Commission Lowers Growth Outlook sinking stocks
The European commission lowered its growth forecast for the region to 1.3% from 1.7% and hinted that the 2009 estimates will be reduced as well. Finance minister Jean-Cluade Junker stated that growth significantly deteriorated in the past few months, and the region could be entering a technical recession. Meanwhile, French industrial production rebounded 1.2% in July which may signal that things are completely broken in the region. The U.K. GDP estimate fell 0.2% which shows that the Britian problems are continuing and the country isn’t expected to contribute growth to the region in the near term.
DAX 6231.76 -1.65 -0.026%
German stocks were lower as the regions growth outlook diminishes led by SIEMENS AG (SIE GY): Europe's largest engineering company and E.ON AG (EOAN GY): Germany's biggest utility.
FTSE 100 5398.90 -16.70 -0.308%
The FTSE was lower as the a drop in imports and the outlook for growth dimmed the country’s growth expectations. The FTSE was led lower by RIO TINTO PLC (RIO LN): The world's third-largest mining company and DIAGEO PLC (DGE LN): The world's largest liquor maker.
CAC 40 4300.02 + 6.68 + 0.156%
The CAC 40 was one of the few indices trading higher as the rebound in industrial production boost the outlook for producers. The index was led by SANOFI-AVENTIS SA (SAN FP): France's biggest drugmaker and ARCELORMITTAL (MTP FP): The world's biggest steelmaker.
IBEX 11238.40 -111.60 -0.983%
Spain’s IBEX 35 extended yesterday’s losses led by BANCO SANTANDER SA (SAN SM): The largest bank in Spain and IBERDROLA SA (IBE SM): Spain's second-largest power company.
S&P/MIB 28203.00 -60.00 -0.212%
Italy's S&P/MIB Index was lower led by UNICREDIT SPA (UCG IM): Italy's largest bank and BANCO POPOLARE SC (BP IM): The bank created by Popolare di Verona's purchase of Banca Popolare Intaliana.
AEX 395.91 + 0.18 + 0.045%
The Amsterdam Exchanges Index rose led by ROYAL DUTCH SHELL PLC (RDSA NA): Europe's largest oil companyas oil prices firmed on the OPEC statement.
SMI 7173.50 -15.95 -0.222%
The SMI gave back some of yesterday’s gains led by CIE FINANCIERE RICHEMON SA (CFR VX): The world's second-biggest luxury-good company and ABB LTD (ABBN VX): The world's largest builder of power networks.
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