ECB, BoE Left Rates Unchanged

123jump.com Staff
04 Oct, 2007
New York City

The European Central Bank and the Bank of England left rates unchaged in what appears to be a coordinated move among central bankers around the world. Earlier Reserve Bank of Australia and Bank of Japan left their rates unchaged after the Fed in the U.S. lowered its rate to 4.75%. After the first thirty minutes of trading stocks in New York are trading sideways. Mariott, Family Dollar, and constellationa Brands reported earnings. Dollar is trading slightly higher.

[R]10:00AM New York – Stocks in New York trade lower at the opening. ECB and BoE left rates unchanged.[/R]

U.S. Labor Department of Labor said today that initial jobless claims increased by 16,000 to 317,000 during the week ending Sept 29. The 4-week moving average was 312,750, an increase of 500 from the previous week''s revised average of 312,250.

The advance seasonally adjusted insured unemployment rate was 1.9 percent for the week ending Sept. 22, unchanged from the prior week''s unrevised rate of 1.9 percent.

The advance number for seasonally adjusted insured unemployment during the week ending Sept. 22 was 2,541,000, a decrease of 10,000 from the preceding week''s unrevised level of 2,551,000. The 4-week moving average was 2,557,250, a decrease of 12,750 from the preceding week''s unrevised average of 2,570,000.

Asian markets fell across the region led by a sharp fall for the second day in Hong Kong. The Chinese regulators are likely to prevent simultaneous listing of government controlled companies in Hong Kong and exchanges on mainland China. India dropped after a daily rise for nearly two weeks.

European markets traded fractionally higher in the afternoon trading. Dollar was slightly weaker against euro at $1.4103 after the ECB and the Bank of England left the rates unchanged.

The European Central Bank left the rates unchanged at 4% after issuing a statement that talked about fighting inflation but offered little clues to the bank’s next move. The ECB is battling rising euro against dollar and worried that the current global credit market malaise induced by the U.S. subprime lending is likely to act as a drag on the European economy. ECB has injected at least $300 billion in liquidity, more than funds injected by the Federal Reserve Bank in the U.S.

The Bank of England also left its interest rate unchanged at 5.75%, highest among the Group of Seven wealthiest nations. Pound rose after the news against euro and dollar.

Earlier Reserve Bank of Australia and the Bank of Japan left its rate unchanged in what appears to be a coordinated move among central banks around the globe.

Following are some of the stocks to watch in early trading in New York.

Marriott International ((MAR)) reported earnings of 33 cents per share or $131 million, a decline of 7% from a year ago.

Wet Seal ((WTSLA)) lowered its estimate for the third quarter profit less than 2 cents from an earlier estimate between 7 cents and 10 cents.

NutriSystems ((NTRI)) lowered its earnings estimate between 62 cents and 66 cents from 77 cents and 82 cents in the third quarter. The company lowered its quarterly revenue estimate to $188 million from $200 and $208 million. In the early trading stock was down $11 to $37.

Family Dollar ((FDO)) reported earnings for the fiscal fourth quarter ending on September 1 of 26 cents per share compared to 21 cents a year ago.

Research in Motion (((RIMM)), the maker of wireless devices, is expected to report third quarter profit between 49 cents and 50 cents after the close.


[R]6:00AM New York, 7:00PM Tokyo - Profit taking weighs Japan down 0.62%. Energy technology stocks and retailers retreat.[/R]

Japan stock index traded in negative territory on profit taking from investors as the stock market peaked to an eight week high in the past three days.

In Tokyo trading Nikkei 225 fell 0.62% or 107.4 to 17,092.49. Of the Nikkei 225 stocks 65 rose, 153 declined and 7 traded unchanged. 56 stocks lost 1%. In the index stocks, Itochu Corporation led decliners, slipping 5.44%, followed by Sapparo Holdings, which shed 5.22%.

Oil fell below $80 per barrel after an unexpected increase in U.S. inventories. Crude oil was trading at $71.96 per barrel in Tokyo. Energy stocks fell as a result. Mitsubishi Corp declined 3.59%, Mitsui & Co fell 3.64%, and Inpex Holdings lost 0.84%

Deputy Governor of the Bank of Japan Kazumasa Iwata told business leaders in Shimonoseki, South West Japan today a recession in the U.S. and economic slowdown in the Euro zone would impact negatively on Japan’s economic growth. Iwata also added that a fall in Japanese stocks and gains in the yen would have the same adverse effect. Iwata was the only member to vote for a rate hike in the last meeting and majority of the economists are of the opinion that interest rate will not be raised in Japan in the next meeting on October 11th.

NTT DoCoMo, Japan’s biggest mobile company, and KDDI are expected to trim mobile phone charges by 30%. The two firms are leading mobile telephone service provider in Japan.

The yen traded at 116.54 from 116.57 against the dollar and was quoted at 164.3 from 164.34 to one euro at the close of trade.

Of the Nikkei 225 index shares, Fuji Electric Holdings led the gainers with a rise of 6.23%, followed by increases of 5.72% in Yahoo Japan Corporation, 5.31% in IHI Corporation, 2.95% in Fast Retailing and 2.74% in Tokyo Dome.

Itochu Corporation led decliners with a slump of 5.40%, followed by losses in Sapparo Holdings of 5.22%, in Aeon Company Limited of 4.59% in Mitsubishi UFJ Nicos of 4% and Mitsui & Company of 3.64%.

Retailers also fell on waning investor confidence. Aeon Company Limited tumbled 4.59% to 1,623 yen, Takashimaya Company Limited shed 2.29%, while Seven & I Holdings slipped 3.31% on Nikkei Newspaper reports the company is likely to report operating profit below the estimate for the first half. The report said that operating profit is likely to be at 145 billion yen for the six months to August 31, up 2% from a year ago but below the forecasted 148 billion yen.

Izumiya Company reported first half net income of 910 million yen, a decline of 40% from a year ago. The supermarket chain fell 6.3% to 644 on the news.

The sell-off of technology stocks in the U.S. semiconductor companies including Intel Corp, Nvidia, and Advanced Micro Devices, coupled by 77% decline in prices of memory chips on the spot market also affected Japanese technology stocks. Advantest lost 0.81% and Toshiba slumped 1.74%.

Elpida Memory said that it plans to lower the chips it sells in auctioned market and sell more directly to customers. Elpida jumped 7% to 4,180 on the news bucking the decline in the chip sector trading today.

Sony plunged 2.37% after news the company will be selling some of its product lines at its chip factories in Kyushu to cut its investment in semiconductor business from 150 billion yen to 130 billion yen.