Minyanville's Before The Bell: Cautious Bulls Point To Lower Futures
Asian markets traded higher but Europe is mixed after moves by the BOE. Bulls are cautious and futures are pointing down.
Asian markets all traded higher this morning. The Hang Seng ended up 2.02%, Sensex up 0.86%, Taiwan up 1.48%, Shanghai up 1.14%, and the Nikkei added 0.88%.
Over in Asia, Bank of Japan board member Mizuno tried to calm investor concern stating the markets had overreacted and backed the Fed's decision earlier this month to cut the discount rate. Mizuno, known as the most hawkish board member, added that a Fed rate cut in Sept would not necessarily rule out a rate increase by the BOJ the following day. (From Reuters) Please view our extensive coverage of the moves by the central banks around the world on our Economy page.
China's finance minister Jin Renqing abruptly resigned for "personal reasons." Mr. Jin will take a far lesser role as deputy chief of a think tank, the State Council's Development Research Center. (From WSJ)
In Europe, markets are mixed in trading. The CAC is up 0.45%, DAX is down -0.15%, and the FTSE is up +0.29%
The Bank of England loaned approximately $3.2 bln at a penalty rate of 6.75% suggesting continued risk aversion and reluctance by the commercial banks to lend money. An economist at BNP Paribas stated "it is a massive number, but it's important to understand if it is a single institution or a number of borrowers." (From Bloomberg)
Germany's WestLB reported a net loss after booking a $826 mln charge for proprietary trading losses. "The figure is depressing" said CEO Stuhlmann, but did add the move not "to delay withdrawal from proprietary trading with spread positions" was correct as it would have "exposed WestLb to dangerous and incalculable risks…" (From WSJ)
Here in the U.S, subprime contagion continues as Toyota's (TM) president warned today that U.S. subprime issues will affect the sales in the U.S. but won't have a major impact on earnings. (From WSJ) Professor Depew spoke about contagion on Wednesday in his daily column Five Things You Need To Know.
Financials continue to receive downside pressure as earnings estimates of Goldman Sachs (GS), Morgan Stanley (MS), Merrill Lynch (MER), and Bear Stearns (BSC) were cut by Lehman (LEH) analyst Roger Freeman citing effects of dislocation in the credit and asset-backed and mortgage markets. Click here for Minyanville's Stocks to Watch for more company-specific ideas.
Significant economic data will be released this morning. GDP and Initial claims figures are scheduled for 8:30 AM EST. Please click here for the full trading radar. Please continue to check back on our News and Views page for continuously updated information you need to know. Good luck and Good Trading!
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