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Forex Blog - US Market Update
Dow -34 S&P -3 NASDAQ -3.5
- Indices fell from the open on
continued pessimism over the economy as a whole and financials in
particular, although fresh declines in crude to levels unseen since May
helped equities recover slightly. Crude futures rose overnight on concerns
tropical storm Fay could disrupt oil operations in the Gulf of Mexico,
although prices have fallen again after the open. Natural gas futures are
down more than 2% with the Sep contract sporting a 7 handle as it appears
Tropical storm Fay will stay on a more easterly course. The major
financials are down 1-2% in early trading. Overnight UBS cut its Q3
estimates for C, JPM and GS, saying that the firms "may appear mortal" in
the coming quarter, while Fox-Pitt cut its Q3 estimates for Goldman and
predicted the firm will have about $2.1B in writedowns. The Wall Street
Journal reported that some analysts believe LEH may have a Q3 loss of $1.8B
or more and is considering pre-announcing its earnings again this. FRE and
FNM are both down more than 10% as pessimism deepens regarding the firms'
ability to prevent a major intervention by the US Treasury. A Barron's
article from the weekend noted that it is growing â€śincreasingly likelyâ€ť
that the Treasury will recapitalize the GSEs and most likely â€świpe outâ€ť
holdings of common stock. It hasn't been all gloom among the financials:
FMD+38% is soaring after announcing that a Goldman fund has completed an
equity investment in the student finance company and appointed a new CEO.
Mitsibushi UFJ has raised its bid for the remaining 35% share in California
regional bank UB+13.5% to $73.50/shr from $63/shr it offered back on August
12. LOW is trading around even after opening up nearly 4% on strong Q2
earnings. The home improvement retailer exceeded earnings and revenue
expectations and raised its full-year guidance by a hair. The firm's CEO
cautioned that challenges remain due to a difficult sales environment,
noting that rising fuel costs continue to be a concern, and that the firm
continues to take a â€ścautious and measuredâ€ť outlook on guidance. TSL+3% is
showing strength after guiding higher full-year revenue and shipments, and
reporting stronger margins; the firm did miss the Street's EPS estimates
and non-trivial foreign currency exchange losses due to the appreciation of
the yuan versus the dollar. HSY-8% reported that it sees its full-year
results at the low end of its previously forecasted range, while
reiterating its revenue growth expectations for the year, earning itself a
cut to hold from buy at Citi. Small-cap printing tech firm BLD+20% is on
fire after thrashing earnings estimates.
- The USD continues to
consolidate it recent gains among the majors in a quiet, listless session.
Higher oil and gold prices are helping to quell the dollar's recent surge.
Oil probed into negative territory a few times but climbed back higher
following comments from a US official noted that s that limited signs "so
far" seen in regards to any withdrawal of Russian troops from Georgia. With
the September OPEC meeting is not too far off, there are some calls that
perhaps OPEC should cut back on output in the awake of slowing global
- Dealers are looking ahead to Tuesday's economic calendar,
noting that US housing data could dictate the next leg of the dollar's
price action. EUR/USD is trading at 1.4715 after testing as high as 1.4767
in the session. Dealers are noting of some light euro buy stops building
above the 1.4790 level but add that resistance is seen at 1.4850 area.
Commodity-related currencies are also modestly firmer with USD/Cad at 1.
0595 and AUD/USD at 0.8716. USD/CAD showed little reaction to its
international securities transaction data. Dealers see 1.0530 to 1.0630
area as the current support/resistance level.
- European fixed-
income saw a mixed result for the session. Sept Bunds +20 ticks at 114.40
while Sept Gilts were off 11 tics at 109.05. European equities drifted back
into negative territory as financial, airliners and retails contributed to
- Euro Stoxx 50 down 0.25 at 3,361; FTSE 100 Index -0.1%
at 5,446; CAC 40 Index at 0.25 at 4,446 and DAX -0.2% at 6,413.
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