Markets Report
US equities closed sharply lower amid worries that the banking and housing crisis could worsen. The Dow was off 1.6%. The S&P and Nasdaq lost 1.5%. Resurgent concerns that Washington will bail out Fannie Mae and Freddie Mac hammered the financial sector, and the declines were exacerbated by reports Lehman Brothers is scrambling to avoid a massive loss.
Worries about the US pushed down Asian shares, which flirted with 2yr lows. The Nikkei dropped 2.3%. The ASX fell 2.4%. The Hang Seng slid 0.5%.
The greenback showed continued strength despite the weakness in the US financial sector. EUR/USD fell 49 pips to 1.4643, a 6mth low. Cable was down 99 pips to 1.8547. USD/JPY rose 16 pips to 110.26.
European stock indices are seen sharply lower at the open. The DAX future was off 1%. The CAC future dropped 1.3%. German July producer prices grew 8.9% y-o-y, the highest jump since Oct-1981. August German business sentiment indicators from the ZEW are expected to show continued pessimism about Europe’s largest economy. Need to Know News’ Scream Audio will broadcast the data live at 9 GMT.
Bonds were mostly higher in early trading amid equity weakness. The 10yr Gilt yield fell 3bps to 4.57%. The 10yr Bund yield was little changed at 4.13%. The 10yr JGB yield dropped 1bp to 1.43%. The 10yr T-note yield was down 1bp to 3.81%.
Oil eased as Tropical Storm Fay headed away from crude production sites in the Mexican Gulf. WTI dropped $1.03 to $111.84/bbl. Brent was off $1.01 to $110.93. Gold fell $15.30 to $790.40.