Major indices continue to slip despite being at multi-year lows 
(11/03/2009)
It is worrying that the major indices continue to slip despite being at multi-year lows. The re-emergence of M&A in the large cap pharma sector has failed to reinvigorate the markets, with continued selling in the wider arena. On a more positive notes, we haven’t seen triple digit losses, but it is concerning that we aren’t see bargain hunters dip in to the market at these levels. This morning’s French data has come in at worse than expected levels, which will put further downward pressure on the already beleaguered markets.
Chris Hossain, Senior Sales Manager, ODL Securities
FTSE 100 Key Levels
The 3560 resistance level was a barrier that the FTSE 100 could not break through on Monday and remains a level to be tested yet again. The index made a new 44 day low at 3460 close to our target of 3443 which has now become a key short term support level. If the index stays above 3478 then an opportunity to trade higher may be in the books. 3600 – 3630 is our upside objective.
Dow Jones Key Levels
An indecision day for the Dow Jones saw the index trade in a narrow range creating an “inside bar.” 6710 will be the objective for today’s trading on the upside whilst the lower end needs to hold 6515. Until either side is taken out traders will be looking for choppy action to indicate the next short term direction. The chance of re-testing the 6400 level is still a possibility as the major trend remains weak.
Sandy Jadeja, Chief Market Strategist, ODL Markets
Markets
• In London –London shares bounced back from sharp early falls sparked by heavy losses in banking and financial stocks. The FTSE 100 index ended the day up 11.67 points, or 0.3%, at 3542.4. Lloyds fell 10% after the announcement late on Friday that the government was increasing its stake to 65%, before recovering to end the day up 4.1%. The day's biggest losers were property companies Land Securities and British Land, both of which fell around 10%. Aviva was up more than 8%. Other banking stocks among the day's biggest losers included Barclays, which fell 5.3%; RBS, which dropped 4%; and HSBC, which lost 3.3%.
• In the US– Pharmaceutical giant Merck was the leading faller on Wall Street, down 7.7% after it unveiled a $41.1bn merger with Schering-Plough. The Dow Jones index closed down 79.89 points, or 1.21%, at 6,547.05. The S&P 500 index ended down 6.85 points, or 1%, at 676.55. Bank of America was the biggest gainer, up 19.4%, followed by General Motors. Meanwhile the Nasdaq saw its lowest close since October 2002. It fell 25.21 points, or 1.95%, to 1,268.64.
• In Europe –European shares were expected to open mixed on Tuesday, but investors were likely to stay cautious following losses in U.S. and Japanese markets on weaker pharmaceutical stocks. On Monday, The FTSEurofirst 300 index of top European shares closed 0.7 percent lower at 657.30 points after setting a fresh lifetime low. The index has declined 21 percent so far this year after plunging 45 percent in 2008, hit by a financial crisis that began with U.S. mortgage defaults in 2007 and has pushed much of the world into a deep and vicious recession. More economic data painted a bleak picture. China fell into deflation at the consumer level last month for the first time in more than six years. Commerce Minister Chen Deming and Industry Minister Li Yizhong, speaking at a joint news conference, both used the word "grim" to describe the immediate outlook for Chinese exports and the manufacturing sector. As the G20 group of rich nations and big emerging powers prepares to meet in London next month, top U.S. economic officials pressed on Monday for coordinated global action to battle the worst financial crisis since the 1930s.
• In Asia –Japan's Nikkei average fell 0.4 percent on Tuesday, with drugmakers such as Astellas Pharma sliding amid worries about their global competitiveness after Merck proposed to take over Schering-Plough. The benchmark Nikkei lost 31.05 points to 7,054.98, a new 26-year closing low. The broader Topix fell 1 percent to 703.50, a fresh 25-year closing low.
News
• BARCLAYS - The bank was warned on Monday its balance sheet would be subject to forensic Treasury examination if it decides to dump toxic assets on the taxpayer, the
Financial Times said. Also, Barclays agreed on Monday to acquire the Bear Wagner Specialists LLC operations from JPMorgan Chase & Co, a move that will leave the New York Stock Exchange with five designated market makers.
• LLOYDS BANKING GROUP - Victor Blank and Eric Daniels, the chairman and chief executive of the bank must explain the deal they have struck with the government if they are to save their jobs, shareholders decided, the Daily Telegraph reported.
• HSBC - HSBC clawed back 14 percent in Hong Kong trade on Tuesday after its biggest slide in at least three decades a day earlier, but gains were limited by caution on the lender's outlook and its massive upcoming cash call.
• BP - BP has agreed to pay $785,662 to settle alleged violations of U.S. environmental regulations at its Texas City, Texas, refinery, the federal Environmental Protection Agency said on Monday.
• AIRLINES - Demand for air travel is sliding much more quickly and significantly than airlines expected, prompting projections that the industry will be forced to further trim how many planes are in the air, with some major airlines are expected to disclose pessimistic forecasts for the rest of this year at an industry investor conference Tuesday, the Wall Street Journal said.
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