While you were sleeping: Fed report shows US improvement, dollar weakens

Thursday 10th September 2009

The Federal Reserve’s Beige Book business survey showed most of the Fed’s regional banks reported stability or improvement in the economy, stoking optimism the world’s biggest economy is climbing out of recession.

Five out of 12 Fed regional banks said they saw signs of economic conditions improving, while six reported stability. The St. Louis district reported the contraction was moderating."Most districts noted that the outlook for economic activity among their business contacts remained cautiously positive," the Fed said in the Beige Book.

Still, demand for commercial property remains weak and a pick-up in vehicle sales, driven by the government’s ‘cash for clunkers’ programme may not last. Labour markets were still weak and retail sales flat.Stocks on Wall Street gained.

The Dow Jones Industrial Average climbed 0.5% to 9547.22 and the Standard & Poor’s 500 Index gained 0.8% to 1033.37. The Nasdaq Composite rose 1.1% to 2060.39.Manufacturers were among gainers on the Dow.

Caterpillar rose 3% to US$48.41, General Electric gained 2.6% to US$14.87 and 3M Co. climbed 2.1% to US$73.18.

Goldman Sachs Group raised its rating on multi-industry companies to ‘attractive’ from ‘neutral,’ saying industrial momentum will increase.

In Europe, the Dow Jones Stoxx 600 Index rose 0.9% to 240.09, its fifth daily advance.

Renault SA climbed 6.9% after the automaker’s chief executive, Carlos Ghosn, said the worst of the financial crisis is over. BMW gained 7.7% after Morgan Stanley raised its rating on the German luxury car maker to ‘overweight’ from ‘underweight.’

Commerzbank AG surged 12%, leading the Stoxx 600 higher, after Germany’s second-largest bank said it was now well-capitalised and will return the balance of the unused debt guarantees it received from the nation’s bank-rescue fund.

Among regional benchmarks, the UK’s FTSE 100 closed above 5,000 for the first time since September 2008. British Airways led the advance, gaining about 5% after Commerzbank raised its recommendation on the airline.

Oil companies gained after BG Group said its offshore Guara field near Brazil contains between 1.1 billion and 2 billion barrels of oil. Cairn Energy climbed 4.2% and BG Group rose 3.8%.

Easyjet Plc rose 2.2% after Commerzbank recommended buying shares of the discount airline.

UK consumer confidence rose to the highest level in more than a year last month, according to the Nationwide Building Society.

France’s CAC 40 rose 1.3% to 3707.69 and Germany’s DAX 30 rose 1.7% to 5574.26.

The Dollar Index fell to its weakest in about a year as optimism for US and world growth helped fuel demand for higher-yielding assets and sapped demand for the greenback as a haven.The index slipped 0.3% to 77.10, the lowest since September last year, helped by a decline in the three-month London interbank offered rate, or Libor, for loans in dollars to a record low of 0.299%.

The dollar weakened to $1.4556 per euro from $1.4478 and earlier reached $1.4601, the lowest since December. The yen strengthened 0.3% to 92.03 against the dollar having traded at 91.61, the strongest since February.

Benchmark US crude oil rose 0.3% to US$71.28 a barrel amid expectations the Organisation of Petroleum Exporting Countries will maintain output quotas at the meeting of ministers from the cartel nations.

Copper fell after stockpiles monitored by the London Metal Exchange rose and figures showed a slump in US consumer borrowing, raising concern the US economy will recover only slowly. Federal Reserve figures this week showed a record US$21.6 billion decline in consumer credit.

Copper futures for December delivery fell 1.1% to US$2.924 a pound on the New York Mercantile Exchange.

Gold for December delivery slipped 70 cents to US$999.10 an ounce having traded above US$1,000 for the first time since February the previous day.

Apple Inc. chief executive Steve Jobs made his first public appearance since taking medical leave for about six months to have a liver transplant. Looking thin and pale, Jobs introduced a new line-up of iPod models in San Francisco.

“I now have the liver of a mid-20s person who died in a car crash and was generous enough to donate their organs,” Jobs said. “I hope we can all be that generous.”

Businesswire.co.nz

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