Minyanville's Before The Bell: Global Markets lower, HD, Futures down
Credit fears are back on top. Home Depot will take a cut. Futures are down.
Asian indexes ended lower. Australia's ASX 200 ended down -1.16%, Japan's Nikei ended down -0.41%, the Hang Seng ended down -0.20%, and Korea's Kospi was down -0.47. The Shanghai composite continued its rally above the 5100 mark for a 1.49% gain and India's Sensex was another exception adding 1.84%.
Topping the headlines in Asia, the Bank of China surprised investors with a $9.7 bln exposure to U.S. subprime securities resulting in 6.4% slide in its stock. The previous consensus was that Asian banks did not have heavy subprime exposure. The drop was the largest for the company since going public last year. Get caught up on the subprime issues on our Subprime Slime page.
Markets in Europe are not performing as well either. The CAC is down -0.03%, the DAX is up 0.40% and the FTSE is down -0.03%.
News of Germany posting its first budget surplus in 20 years helped push up bullish sentiment. Yet current market issues continue to weigh on the minds of investors as Germany's Landesbank Sachsen rebuffed a report that it received approximately $88 bln in emergency funding. The bank stated the funding is less than 5% of that figure. (From Bloomberg) Please read Mr. Practical's More Bailouts Could Bring Disaster Down The Road for his warnings of the effects of intervention by the central banks.
In the U.S, investors were carefully watching Home Depot's (HD) sale of its wholesale supply unit. The sale announced in June was expected to close yesterday, but Lehman Brothers (LEH), Merrill Lynch (MER), and JPMorgan (JPM) threatened to back out citing the slump in HD's supply business. Sources close to the story said HD may be willing to accept a $1 bln price cut to salvage the deal.
Not helping the Bull case is a story in the Wall Street Journal that quant hedge funds have taken hard hits this summer especially in recent weeks. The losses were mostly blamed on too many funds following the same strategies. Toddo first warned about the problem of hedge funds in a circle shooting each other in his 2005 letter Keynote Address From Ojai.
Two bits of economic data is set to be released this morning. AT 8:30 AM EST, Durable orders will be released, and New Home Sales figures are scheduled at 10:30 AM EST.
Be sure to click on our Stocks to Watch for more company-specific ideas. Good luck and Good Trading, Minyans.
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