While you were sleeping: BusinessWire overnight wrap

Thursday 8th January 2009

Stocks on Wall Street fell on signs the US economy is shedding jobs, Intel Corp. posted weaker-than-expected sales and aluminium producer Alcoa announced plans to cut production and reduce its workforce.

The Dow Jones Industrial Average fell 3.1% to 8738 and the Standard & Poor's 500 Index dropped 3.3% to 904.3%. The Nasdaq Composite slipped 3.4% to 1595.85. Intel, the world's biggest maker of computer chips, fell 6% to US$14.45 after posting a 23% drop in fourth-quarter sales to US$8.2 million, missing its own target.

US companies shed 693,000 jobs in December, according to ADP Employer Services, the most since its record began in 2001. The report stoked fears that non-farm payrolls data due out on Friday will be worse than the 500,000 job losses predicted in a Reuters survey, with some analysts speculation the number could be as large as 700,000.

Job losses help underline the extent of the US economic slump. Federal Reserve Bank of Kansas City Thomas Hoenig said the final quarter of 2008 and probably the first half of this year makes a "grim" picture. He predicted a revival in US economic growth in the third quarter provided the Federal Reserve and US government provided sufficient stimulus.

Alcoa, America's biggest aluminium company, fell about 10% to US$10.93, leading the Dow lower, after saying it would cut smelting output by 135,000 metric tons and eliminate 13,500 workers as demand drops.

Aluminium fell 0.9% to US$1,590 a ton, adding to the metal's 36% slide on the London Metal Exchange last year as inventories more than doubled.

Chevron fell 4.6% to US$73.80 after the price of oil sank 12% on bigger than expected growth in US stockpiles. Inventories of oil rose by 6.68 million barrels to 325.4 million barrels last week, according to the US Energy Department. An increase of just 800,000 barrels was expected, according to a Bloomberg survey.

Crude oil gained yesterday on concern about tensions in the Gaza Strip and Russia's dispute with Ukraine over gas shipped to Europe. Russia has since stopped all gas flows to Europe via Ukraine until its neighbour agrees to pay what it called full market prices.

Job losses in the US are being echoed around the globe. German unemployment rose last month by 18,000, underpinning the importance of that nation's government plans for a second, 50 billion euro stimulus package.

Germany's DAX 30 fell 1.8% to 4937.47, with ThyssenKrupp declining 6.8%. Commerzbank declined 4.8% after analysts at JPMorgan Chase said the lender's acquisition of Dresdner Bank will erode profit and Allianz fell 3.7%.

The Dow Jones Stoxx 600 Index fell 1.2% to 210.31. Rio Tinto shed 6% after Alcoa's announcement of production cuts. ASML Holding, Europe's biggest manufacturer of computer chip equipment, fell 4.4% after Intel's announcement of weaker sales.

France's CAC 40 declined 1.5% to 3346.09 as AXA slid about 4% and Vivendi fell 4.3%. Cap Gemini dropped 4.8%. In London, the FTSE 100 dropped 2.8% to 4507.51, led by energy and mining companies. BHP Billiton dropped 8% and Cairn Energy fell 8.4%.

US Treasury bonds as record-sized sales of government debt stoked concern about a glut of the securities as the federal government funds its budget deficits and increases spending. The yield on ten-year notes rose 6 basis points to 2.52%.

The US dollar fell against the euro after the jobs survey. It slid to $1.3621 per euro in New York from 1.3536. The dollar traded at 92.50 yen from 93.65. The euro bought 125.98 yen from 126.75.

Copper futures for March delivery fell 4.5% to US$1.5115 a pound on the New York Mercantile Exchange. Gold futures for February delivery fell 2.8% to US$841.70 an ounce.

www.businesswire.co.nz

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