Against the Grain

Governments and central banks were busy over the weekend trying to plug the levees of the international financial system. Judging from the initial market reaction the array of measure – too numerous to list here – seem to have a positive effect. It seems having eventually woken up the seriousness of the threat they are assembling the necessary resources to stem the tide. With Japan closed the ASX rose 5% and Hang Sang 3.2%.

Metals gained overnight supported by the flurry of government action over the weekend. Further support for cu came from news that on Fri Escondida had declared force majeure after the shut down of a plant used to grind ore, it is expected to affect 15% of concentrate production or 10% of total cu output. In China the Spt monthly trade surplus widened to a record US$ 29.3 billion with exports up 21.5% and imports 21.3%. Exports to the US slowed by 4.6% yoy.  LME stocks dominated by a sharp rise in ni, 1344 tonnes with Liverpool receiving 1484 tonnes. The LCH raised the cu initial margin to US$ 16,250 (US$ 13,125).

In meetings most of the day as DJI rose over 500 points (6%) with Morgan Stanley benefiting from Mitsubishi UFJ Bank agreeing to take a stake. It is perhaps fitting that in a time of economic gloom Professor Paul Krugman of Princeton winds the Nobel Prize for Economic, the man who correctly called the Asian crisis.