US shares fell, along with Europe but Asia held up, a situation that looks like being reversed judging by the futures quotes this morning.
Bloomberg has futures prices for Australia’s ASX 200 and Japan’s Nikkei in the red but is showing a gain for the Hang Seng in Hong Kong which is bouncing off a big sell off.
Driving the mixed picture is another big drop in the value of the US dollar to over 1.58 to the euro, which in turn helped send oil, wheat, copper, gold and other commodity prices higher. Gold ended up $US14.50 at more than $US954 an ounce; New York oil was up $US4 to almost $US106 a barrel.
The dollar’s drop followed more economic data showing the US economy is struggling: orders for durable goods fell by more than forecast and sales of new homes fell to a 13 year low in February.
And a leading banking analyst cut the earnings forecasts for the big US banks like Citigroup and Bank of America.
In Europe Deutsche Bank revealed that it will struggle to reach its 2008 earnings goals because of plunging business and revenues in most areas, except foreign exchange and interest rate dealings. Corporate finance of all types is depressed.
The Deutsche Bank admission justified the downgrades from Oppenheimer’s Meredith Whitney who famously tipped the Citigroup write-downs and earnings falls late last year that almost crippled the big bank.
As a result Citigroup fell and led financials to their biggest retreat in almost two weeks. Whitney forecast that Citi’s first quarter loss will be four times bigger than previously forecast.
Major industrial stocks like Deere & Co. and United Technologies fell on the durable goods news which showed the worst-ever slump in machinery demand and radio group, Clear Channel suffered its steepest drop since 1989 on a growing belief that its $US19.5 billion takeover (announced a year ago) will fail because the banks funding it won’t put up the money.
The Standard & Poor’s 500 lost 0.9%, the Dow also shed 0.9% and Nasdaq was off 0.7%.
The fall in durable goods orders for February was unexpected and was led by a slump in demand for machinery, as the housing slump and looming recession makes companies reluctant to invest.
The US Commerce Department also reported that new homes sales dropped 1.8% last month to a 13-year low.
With only exports are preventing manufacturing from declining even more, economists at Morgan Stanley now predict the economy will shrink at an annual rate of 0.7% in the first quarter, from the previous forecast of a 0.4% fall.
In European shares fell, while Asia’s regional benchmark index climbed for a fourth day.
European stocks fell after the Deutsche Bank forecast that it may not meet its earnings forecast and the gloomy economic news from the US.
Although German business confidence climbed for a third month, it was not enough to offset the downturn in sentiment.
National share market indices retreated in 12 of the 18 western European markets. London’s FTSE 100 lost 0.5%, as did Germany’s DAX. France’s CAC 40 fell 0.3% and the Stoxx 50 sank 0.9% and the Euro Stoxx 50, a measure for the euro region, dropped 0.6%.
Japan’s stocks fell, Hong Kong edged Higher, but Australia rose strongly on the back of strong buying of resource stocks yesterday.
Tokyo’s Nikkei 0.3% but that fall was accounted by around 85% of companies in the index going ex-dividend, which cut an estimated 103 points from the index.
Australian shares rose 1.2% to a three-week closing high as a bounce in oil and metal prices lifted heavyweight resource firms such as BHP Billiton and Woodside Petroleum.
Analysts said while the rebound in commodities had boosted sentiment, bleak US economic data again raised concerns about the impact of a slowing US economy on demand for resources.
Reigniting worries about a US recession, data showed that US consumer confidence fell to a five-year low in March, while two reports unveiled yet more weakness in the ailing US housing market.
The ASX 200 index rose 63 points to 5,381.4, adding to Tuesday’s 3.7% rise.
BHP added 2.6% to $35.31, while Rio Tinto, rose 1.1% to $118.27.
Shares in CBH Resources and fellow zinc miner Perilya Ltd climbed after Perilya offered $294 million for CBH, aiming to unite their aging mines in Broken Hill .
CBH jumped 14.5% to 39.5c and Perilya gained 14.5% to $1.145.
David Jones, added 4.8% to $3.71 after it reported a 25% jump in first-half underlying profit and maintained its forecast for the rest of the year.
Macquarie Group , Australia’s top investment bank, fell 2.1% to $54.12 while National Australia Bank lost 0.8% to $30.35.
