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Gmm09 12 01 Pm


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Gmm09 12 01 Pm

  1. 1. GLOBAL MARKETS MONITOR Global Markets Division Wednesday, September 12, 2001 International Capital Markets Department Dow 9 ,60 6 (0 %) Nik kei 9 ,61 0 (-6.6%) US 3 0 -Yr. 5 .44 % (4 bp) € 0 .90 7 (-0.7%) Nasdaq 1 ,69 5 (0 %) FT SE 4 ,88 2 (2 .9 %) EM BI+ n .a. n .a. ¥ 1 19 .5 (0 %) Global Markets US financial markets were closed again today. The stock exchanges are in consultations with regulators about reopening and will possibly be There do not appear to be any signs of major open tomorrow. Decisions are expected later systemic strains in global financial markets in today. US stocks did not trade in Europe today. spite of the spike in asset market volatility seen The Chicago Board of Trade said its electronic since the terrorist attack on American civilian brokerage screens would be up and running this and military targets yesterday. While anecdotal evening. The feared deaths of many traders, evidence so far suggests there may have been especially those trading on the Nasdaq, may also some temporary delays in clearing and affect trading and liquidity on bourses when they settlement systems in the US, and the inability reopen. of some investor counterparts to meet margin calls with their brokerages, the extraordinary Bond markets were closed on the situation appears to have led market participants recommendation of the Bond Market to use discretion in allowing orderly settlement Association. The trade group would assess the of positions and few forced liquidations. The situation “day by day.” The destruction of Federal Reserve Bank of New York pumped Cantor Fitzgerald, which trades about a quarter more than $38 bn in reserves into the US of US government bonds, had reportedly caused banking system, about 10 times size of a some settlement problems yesterday which regular daily action, to ease fears of a possible appear to have been resolved. Dealers were banking cash crunch. This is in addition to the reportedly quoting some prices in London in an $80 bn added to the financial system by the appearance of business as usual, but only in an ECB, Swiss National Bank and the Bank of effort to roll over positions through Monday and Japan. The US Federal Reserve and the Bank not to allow new position taking. of England have reportedly asked central banks to limit hard currency denominated On the major foreign exchange markets, the operations to curb excessive volatility. euro is stable against the dollar while the yen is 0.7% lower. Trading in London was only half Heightened risk aversion and volatility set the normal volume. Despite the lack of liquidity, today’s tone for market movements worldwide. dealers reported they were not having difficulty There is growing sentiment the attacks will closing positions on the spot market, but said deepen the current economic slowdown and derivatives were proving difficult to execute as erode consumer confidence. Bank of England the forward market was extremely thin. ACI, the governor George said the major economies international financial market association, said would have the scope to respond to any payment systems seemed to be working in economic problems resulting from attacks on the Europe and the US. US, but that coordinated interest rate cuts were very unlikely. Spikes in commodity prices are European stock markets gained 1-3% today expected to be temporary. after the injection of liquidity, providing relief to shaken global markets. But trading was thin and investors moved into defensive stocks such as This is an internal document. It is produced by the Global Markets Division (GMD) of the International Capital Markets Department. It reflects GMD staff’s interpretation and analysis of market views and developments. Market views presented may or may not reflect the consensus of all market participants. All data and information are from market sources unless otherwise noted. GMD staff do not independently verify the accuracy of data, statistics or events presented in this document. Page 1
  2. 2. Global Markets Monitor Wednesday, September 12, 2001 pharmaceuticals (up 7%). Oil shares fell back intervening in the foreign exchange markets and sharply after oil prices dropped. British Telecom that yesterday’s 1.1 bn reais debt auction would jumped 10.8% and Alcatel 9.5% due to an instead take place today. Moreover, the central expected increase in both telecom and security bank stated that it stood ready to provide services. Airlines and hotels are still down additional liquidity to any Brazilian commercial sharply. Insurance stocks swung wildly. bank that may need it. The Mexican peso Moody’s estimated insurance claims in New rebounded strongly and rose 0.8% to 9.44 pesos York at $10-15 bn. per dollar, as traders moved rapidly to take advantage of the perceived overreaction Trading in dollar-denominated emerging yesterday. With most local market participants market bonds was suspended for the second generally long dollars, it is likely that follow-on day in a row for most markets. Some trading by peso buying to unload dollars and to bring locals in Russian 2030 bonds seems to have dollar/peso positions to neutral, would support occurred, with prices lower, but not substantially the peso and trigger a rally as far as to 9.30 so. A handful emerging market bond trades were pesos per dollar. The Chilean pesos is also also reported in London, but while bid/ask prices recovering and is currently trading 0.9% are quoted, they do not seem to reflect actual stronger at 679 pesos per dollar. trading, but rather a wish to express “business as usual.” European and Asian companies canceled Argentina $4.4 bn of equity and bond sales. PLDT With the interbank market open, overnight peso postponed an investor meeting in Hong Kong. It call rates backed up 500 bps to 15%. No quotes had planned to buy back $329 mn of bonds and were available for the 30-day interbank rate. sell new 10-year bonds for $250 mn. While central bank liquidity injection data had not been released for today, the central bank did inject around $7 mn yesterday. Latin America Brazil Inflation slowed in August, according to the Several regional equity markets reopened for IPCA index. Following July’s substantial 1.33% trading today, with the notable absence of mom increase, August’s inflation index Argentina and Mexico. Market movements are registered a 0.7% mom rise, which was broadly mostly stable, with some signs of a recovery. At in line with market expectations. The absence of the time of writing, the Brazilian Bovespa had government controlled price increases were seen recovered 3.3% of yesterday’s loss. Investors as an important contributing factor for the were seen moving back into telecom and in decrease in inflation. particular oil stocks, such as Petrobras, since the general view is that the stock market overreacted yesterday. Other regional markets were mixed Emerging Europe, Middle East & Africa with the Chilean bolsa posting a 1.5% rise, while the Colombian stock index is showing a loss of 1.2%. Regional equity markets ended the day on a substantially weaker note today in spite of a rebound in Western European courses as Trading in the major regional currencies reduced appetite for risk led investors to switch resumed this morning, with most of them into safe haven country bonds, commodities and showing signs of recovery following yesterday’s precious metals. Markets across the board failed sell-off. The Brazilian real, however, went to reverse the gloom evident at market opening against broader market developments and was Wednesday with telecom stocks seen as trading 0.5% weaker at 2.68 reais per dollar. particularly vulnerable to heightened risk The central bank announced that it is still Page 2
  3. 3. Global Markets Monitor Wednesday, September 12, 2001 aversion. The Czech PX-50 closed down 2.8% to a 3 year low in higher than average volume. Czech Republic The Polish WIG-20 is down 3.7% for the day. The MoF is reportedly considering a delay The Hungarian BUX closed 4.0% lower. The until next year of the sale a stake in Cesky Russian RTSI closed 5.3% lower today as the Telecom. While the results of a tender were due early morning rout failed to reverse. The South to be submitted to the cabinet by late October, African bourse recovered from losses of around but the purchase of shares in its mobile phone 6% and to close about 4.1% lower. unit Eurotel (from AT&T and Verizon) appears to be causing the delay in the sale of Cesky. Regional currencies failed to recover from earlier weakness and closed down against the South Africa dollar Wednesday. The Czech koruna closed The Reserve Bank injected 600 mn rand 0.4% weaker, while the Hungarian forint closed ($69.7 mn) into domestic capital markets today 0.9% weaker while the Polish zloty closed to maintain liquidity in local markets in light of virtually unchanged. The ruble closed 0.4% the heightened volatility. weaker after initial dollar sales were reversed. The South African rand weakened 0.3% while the Turkish lira closed 2.4% weaker. The central bank of Turkey was reported to have intervened in markets as some nervousness at the retail level was seen pressuring the currency. Local currency bonds were mixed in the region with risk aversion concerns offset by expectations of a US interest rate cut. Global Markets Division, International Capital Markets Department: Bankim Chadha, Chief Jens Nystedt, Economist Gabrielle Lipworth, Senior Economist Srikant Seshadri, Economist Chris Morris, Senior Economist Mazen Soueid, Economist Anna Ilyina, Economist Martin Edmonds, Sr Fin Sys Officer Subir Lall, Economist Page 3
  4. 4. Global Markets Monitor Wednesday, September 12, 2001 Equities Currencies S-T Rates B'mark Bonds 9/12/01 1:40 PM Percent change over Percent change over Percent Yields & Spreads * Latest yest. 12/31/00 Latest yest. 12/31/00 Latest yest. Latest yest. 12/31/00 * 9,606 0.0 3.21 3.26 5.44 5.40 5.46 UNITED STATES -11.0 GERMANY2 4,336 1.5 0.907 4.18 4.24 4.82 4.75 4.85 -32.6 -0.7 -3.8 € UNITED KINGDOM2 4,882 2.9 1.466 4.80 4.89 4.87 4.88 4.88 -21.5 -0.7 -1.8 9,610 119.5 0.06 0.06 1.43 1.42 1.63 JAPAN -6.6 -30.3 0.0 -4.2 * 272 0.0 1.00 n.a. 14.0 n.a. 1478 766 ARGENTINA -34.7 11,191 3.4 2.68 n.a. n.a. n.a. 961 744 BRAZIL -26.7 -0.5 -27.2 * 5,531 0.0 9.44 0.8 1.9 n.a. n.a. n.a. 349 386 MEXICO -2.1 9,494 7.799 0.0 0.0 n.a. n.a. 5.72 5.72 6.46 HONG KONG SAR -8.9 -37.1 1,450 1.738 0.7 2.31 2.25 n.a. n.a. 4.09 SINGAPORE -7.4 -24.7 -0.2 430 3.2 9040 0.6 7.0 17.9 17.9 n.a. n.a. 731 INDONESIA -3.5 476 1285 4.91 4.91 n.a. 160 227 KOREA -12.0 -5.8 -0.1 -1.5 * 691 0.0 1.6 3.80 3.30 3.30 n.a. 229 279 MALAYSIA 1,241 51.2 0.2 13.69 11.31 n.a. 564 629 PHILIPPINES -4.1 -16.9 -2.3 TAIWAN Province of China * 4,177 0.0 34.6 0.3 3.46 3.45 ---- ---- ---- -11.9 -4.3 * 330 0.0 22.7 44.4 0.0 3.00 3.00 n.a. 136 183 THAILAND -2.3 331 37.63 5.2 5.2 n.a. n.a. n.a. CZECH REPUBLIC -2.8 -30.9 -0.4 -0.9 5,748 283.2 10.9 10.7 n.a. n.a. 132 HUNGARY -4.0 -26.8 -0.9 -0.3 1,075 4.24 0.0 15.1 15.0 n.a. 217 241 POLAND -3.7 -40.8 -1.5 195 36.2 28.87 ---- ---- n.a. 824 1167 RUSSIA -5.3 -0.4 -2.5 8,112 -2.6 8.631 n.a. n.a. n.a. n.a. 413 SOUTH AFRICA -4.1 -0.3 -12.2 * 9,296 0.0 -1.5 1460000 ---- ---- n.a. n.a. 695 TURKEY -2.4 -54.2 Source: Bloomberg Financial Markets LP; * denotes a holiday; Quotes are relative to data for previous NY (or local market) close. 2 Exchange rates are US$/local currency. 1 Equity & currency prices reflect prior day's close. Page 4
  5. 5. DOW NASDAQ 0.0 0.0 GERMANY 1.5 -6.6 UNITED KINGDOM 2.9 JAPAN ARGENTINA 0.0 BRAZIL -8.9 MEXICO 0.0 3.4 HONG KONG SAR SINGAPORE -7.4 INDONESIA -3.5 KOREA -12.0 Global Markets Monitor MALAYSIA Equities 0.0 PHILIPPINES TAIWAN Province of China -4.1 THAILAND 0.0 0.0 CZECH REPUBLIC -2.8 HUNGARY -4.0 POLAND -3.7 RUSSIA SOUTH AFRICA -4.1 -5.3 0.0 TURKEY 0 1 2 3 -4 -3 -2 GERMANY UNITED KINGDOM -1 -0.7-0.7 JAPAN 0.0 ARGENTINA 0.0 BRAZIL -0.5 MEXICO 0.8 HONG KONG SAR 0.0 SINGAPORE 0.7 INDONESIA 0.6 KOREA -0.1 MALAYSIA 0.0 PHILIPPINES Currencies TAIWAN Province of China 0.2 0.3 THAILAND 0.0 CZECH REPUBLIC -0.4 HUNGARY -0.9 POLAND 0.0 RUSSIA SOUTH AFRICA -0.4 -0.3 TURKEY Page 5 Wednesday, September 12, 2001 -2.4