While you were sleeping: BusinessWire overnight wrap

Thursday 22nd January 2009

US President Barack Obama will release a comprehensive plan to tackle the economic crisis within the next few weeks, according to his nominee to be the next Treasury Secretary.

Timothy Geithner, currently the president of the New York Federal Reserve Bank, told the Senate Finance Committee that Obama would produce "a comprehensive plan to help stabilize the core of the financial system so that banks, which are so critical to our economy, are able to provide the credit necessary to get recovery going again."

Geithner, likely to be approved to the post despite being grilled over an instance when he failed to pay income tax, also pledged to overhaul the US$700 billion bailout fund and urged the Congress to support further efforts to stimulate the economy.

Shares on Wall Street edged higher after his comments, having tumbled yesterday in the steepest Inauguration Day slump in history amid disappointment Obama didn't identify specific economic and fiscal measures to tackle the slump.

Citigroup Inc. climbed 21% to US$3.38 and Bank of America rose 23% to US$6.23, leading the Dow Jones Industrial Average higher on optimism Obama's plans will help banks. The two firms were among the biggest decliners on the Dow yesterday. JPMorgan Chase rose 18% to US$21.29.

IBM gained 11% to US$91 after forecasting profit for 2009 that exceeded analysts' estimates.

The Dow climbed 2.9% to 8181.9. General Motors fell 5.4% to US$3.31 after reporting an 11% decline in sales for 2008, allowing Toyota Motor to take its 77-year-old crown as the world's biggest automaker.

The Standard & Poor's 500 Index gained 3.3% to 831.88 and the Nasdaq Composite rose 3.4% to 1489.74. Hewlett Packard gained 5% to US$35 and Microsoft Corp. rose 3.6% to US$19.15.

Chevron gained 3% to US$70.49 and Exxon Mobil gained 2.9% to US$78.55 after the price of oil rose on optimism about Obama's plans and stocks rose.

Crude oil for March delivery rose 2.2% to US$41.74 a barrel on the New York Mercantile Exchange.

Copper fell in London on concern slowing demand is driving up stockpiles. Copper demand fell 10% in the US in the first 10 months of 2008, according to the International Copper Study Group. Copper for delivery in three months fell 3.6% to US$3,220 a ton in the LME. Aluminum fell 4.4% to US$1,339 a ton as stockpiles of the lightweight metal rose.

Gold futures for February delivery fell 0.4% to US$851.70 an ounce in New York.

In his first day in office, Obama requested a 120 day suspension of the Guantanamo Bay tribunal process and called Middle East leaders to pledge engagement. He also announced a pay freeze for members of his staff, saying in the time of crisis "families are tightening their belts and so should Washington."

US home builder sentiment fell to a record low this month, according to the National Association of Home Builders. The NAHB/Wells Fargo Housing Market Index slipped to a reading of 8 this month from 9 in December, the lowest since the measure was introduced in 1985.

Group of Seven nations will remain mired in recession through most of 2009, according to surveys by Reuters of 300 economists as hundreds of billions of dollars of aid and benchmark interest rates slashed close to zero only dent the economic downturn.

A 'feeble recovery' may emerge in the second half of the year, led by the US, according to the surveys.

The US dollar fell to a three-year low against the yen as options at 90 yen expired without being exercised. Traders had been buying dollars to prevent the greenback dropping below 90 yen, a trade they exited once the options expired.

The dollar fell to 88.67 yen and earlier touched 87.13 yen the lowest since mid-1995. The euro traded at 1.1412 yen, having earlier sunk as low as 112.12 yen, a six-year low.

The British pound fell to the lowest level in more than seven years against the US dollar and weakened against the euro amid signs of deeper financial troubles at UK banks and speculation the Bank of England will cut interest rates further.

The pound was recently at 1.3742 against the dollar and 93.63 pence against the euro. The pound weakened to a record 123.01 yen.

The FTSE 100 Index declined 0.8% to 4059.88 amid concern about the UK's deepening recession and financial sector woes. Barclays fell 9% while Royal Bank of Scotland rebounded 21% after its slump the previous day.
Stoking concern about the ailing British economy, government figures showed the number of people receiving unemployment benefits rose 77,900 to 1.16 million, the highest level since January 2000.

Shares of BHP Billiton fell 2.6% after the world's biggest mining company announced it will cut 6,000 jobs, or 6% of its workforce and close the Ravensthorpe nickel mine in Australia, taking a charge of US$1.6 billion, in response to sliding prices and demand.

The Dow Jones Stoxx 600 Index fell 0.6% to 184.52. Oil producers fell, led by Royal Dutch Shell, which declined 4% after ING Groep estimated an average 27% decline in profit for the industry in the final quarter of 2008.

Germany's DAX 30 rose 0.5% to 4261.15 and France's CAC 40 slipped 0.7% to 2905.57.

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