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wall streets stunning turnaround

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    US equities have made a stunning recovery in late business and
    finished in positive territory after the Dow at one stage was down 114
    points.
    At the bell, the Dow settled 97 points higher, the S&P 500 gained
    11, the Nasdaq composite up 4 and the 100 index ended 7 in front.
    Investors initially were cautious after failing to throw off
    yesterday's sellers which pushed the Dow down 143 points due to dismal
    manufacturing figures, the worst for 7 years, released by the
    Philadelphia Federal Reserve Bank.
    The Dow swung like a pendulum after Merrill Lynch dowgraded
    Fannie Mae and Freddie Mac from neutral to sell.
    They are the largest US sources for home funding whose shares
    have been pummelled by the housing crisis sparked by subprime
    lending.
    Shares of Fannie, the largest US home lender, and No. 2 Freddie
    fell in electronic trade before the opening bell.
    While shares already have witnessed significant selling pressure,
    "we do not think the stocks fully reflect the severity or duration of the
    financial headwinds facing the companies,"suggested Merrill analyst
    Kenneth Bruce.
    Further deterioration in financial market conditions and
    worsening credit performance will undermine fundamentals and the market's
    assessment of their respective financial position, which will
    likely further reduce valuations, Bruce added
    President of the Fed's Dallas, Texas Bank Richard Fisher says the
    housing bubble, credit problems and uncertainty is hitting business
    confidence.
    He says the Texas economy was experiencing a slowdown.
    Fisher says pervasie pessimism is infecting business outlook.He
    warned that the central bank must take care not to stir up inflation.
    He also suggested that the US economy is in a slowdown and faces
    risks of a sag in growth more than expected.
    The Fed is presently in serious discussions over inflation
    pressure partly due to higher food, energy costs .
    In Treasuries, the 10 year note yield slipped a point to 3.77 per
    cent after retaining most of yesterday's big advance.
    Meanwhile GMAC LLC and its Residential Capital LLC mortgage unit
    were cut several notches deeper into junk status by Standard & Poor's,
    which said mounting mortgage losses might require new capital injections
    from General Motors Corp and Cerberus Capital
    Management LP
    Standard & Poors has downgraded GMAC three notches to "B-plus,"
    its fourth-highest junk grade, from "BB-plus," and cut ResCap four
    notches to "B" from "BB-plus." Its rating outlook is negative,
    suggesting further downward pressure.
    Cerberus, the private equity firm, led a group that bought 51
    percent of GMAC from GM in 2006.
    The automaker owns the other 49 percent.
    GMAC has been exploring options for ResCap, including
    asset sales, acquisitions and joint ventures.
    GMAC lost $2.33 billion in 2007, hurt by a $4.35 billion loss at
    ResCap that reflected rising customer defaults, lower loan volume, and
    write-downs. ResCap is the largest independent U.S.
    mortgage lender after Countrywide Financial Corp .
    In more encouraging news, the European Union will create 5
    million new jobs by 2009 and unemployment will fall below 7 percent this
    year, the European Commission said in an upbeat report
    on the 27-nation bloc's labour market.
    But the EU executive expressed concern about still-high
    joblessness among young Europeans and insufficient investment in
    education and training, which Europe needs to face the challenges of
    globalisation and ageing.
    In the market, iron ore prices are rising by 65-71 percent
    in 2008.
    Chinese, Japanese, Korean and European steel mills have
    agreed to terms with Brazilian miner Vale, the largest iron ore producer.
    However, Anglo-Australian firms BHP Billiton
    and Rio Tinto have been holding out for higher prices.
    BHP is locked in takeover battle for Rio.
    The three diversified mining giants increased their production
    of iron ore in 2007.

    In the market, Vanguard announced succession plans that call for
    F. William McNabb III to become president and CEO. Jack Brennan will
    remain chairman of the mutual-fund giant.
    CME Group is moving ahead with plans to buy energy exchange
    operator Nymex Holdings despite concerns about the exchange business
    recently voiced by the U.S. Department of Justice.
    Microsoft will allow key details of its software to be available
    free online as part of a sweeping set of moves aimed at battling Internet
    rivals. The change will encourage programmers to build add-on products.
    Putnam is hoping new fund managers can revive its flagship funds,
    which are being roiled by the credit crunch.
    Dozens of Americans had accounts at a Liechtenstein bank at the
    center of a tax evasion scandal in Europe, according to a person involved
    in international inquiries into the bank.
    In other news Turkish troops launched a ground incursion across
    the border into northern Iraq, an escalation of Ankara's fight against
    Kurdish separatists and a move that could complicate relations with the
    U.S.

    WALL STREET...The Dow Jones Industrial Average climbed 96.72 to
    12381.02. Standard and Poors 500 index rose 10.58 to 1353.11 the Nasdaq
    Composite index edged up 3.57 to 2303.35 the Nasdaq 100 index firmed 7.14
    to 1773.44 In Treasuries the 10-year note rose 3/32 to 97 25/32 trimming
    the yield 1 points to 3.77pc. The 30-year bond yield rose 2 points to
    4.56pc and the 2-year note yield eased 1 point to 1.96pc.


    US DOLLAR... is changing hands at 106.88 yen, compared with
    107.30 previously. The euro is at 1.4821 from 1.4815 previously while
    sterling is at 1.9675 from 1.9623. On the Swiss franc, the US dollar is
    trading at 1.0846 against 1.0892.


    AUSTRALIAN DOLLAR... is changing hands at US92.16c compared with
    US92.06c on the local close. Offshore the Aussie posted a high of
    US92.49c and low of US91.76c. The Aussie crosses are 98.50 yen (pre
    98.58), 0.6218 euros (pre 0.6190) and 46.82 pence on sterling (pre
    46.88).


    EUROPEAN MARKETS... London's FTSE-100 fell 43.7 points to
    5888.50, the Paris CAC-40 lost 34.3 to 4824.55, Frankfurt DAX Xetra
    slumped 98.56 to 6806.29 while Zurich dipped 31.4 to 7454.75. Other
    regionals followed the trend. Amsterdam slipped 2, Brussels fell 64 while
    Madrid shed 16, Milan lost 274 and Oslo ended 4 behind.




    METALS... COMEX gold (Apr) fell $1.40 to $947.80 oz while the
    June contract lost $1.50 to $952.60 oz. March silver rose 9.5c to
    $18.035 oz. April platinum fell $17.20 to $2167.80 oz, while March
    copper shed 2.1c to 378.95c lb in New York.
    On the London Metal Exchange, the official cash ask prices showed
    copper rose $41 to $8322 tonne. Tin traded $115 higher at $17,335, lead
    fell $31 to $3284, zinc lost $19.50 to $2451, aluminium rose 50c to
    $2865.50 and nickel sold $150 higher at $28,550 tonne.
    The 3-month ask prices were: copper $8335 (pre $8399.50), tin
    $17,600 ($17,450), lead $3285 ($3335), zinc $2495 ($2535), aluminium
    $2920 ($2940) and nickel $28,700 ($29,100).



    OIL... April crude rose 65c to $98.88 barrel with a high
    $99.37 and low of $97.16 barrel. The May contract gained 63c to
    $98.44 barrel with a high of $98.89 and low of $96.82 barrel. Brent ICE
    for April rose 67c to $96.91 barrel with a high of $97.65 and low
    $95.66 barrel.

 
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