Dollar/Euro Highest Since Feb.; Commods Drop
Stocks opened stronger in Europe on a generally more positive tone for stock markets; however, the economic weakness in Europe is front and foremost. The British pound is at the lowest level in two years: the Chancellor of the Exchequer said that the British economy could be in its worst slump in 60 years.
Dollar at the highest level since February against the euro.
Commodities are down across the board: not just natural gas down 7 percent, oil down 6 percent, gasoline down 6 percent, but also cocoa down 6 percent, platinum down 6 percent.
Ahead of the OPEC meeting next week OPEC may need to cut oil supplies by as much as 1.5 million barrels per day, or nearly 5 percent, Iran's OPEC governor said on Tuesday.
The commodity drop is having a predictable effect on equities pre-open:
1) airlines are catching a notable bid, with US Air, AMR , Delta , Northwest and Continental all up double-digits.
2) commodity stocks like Rio Tinto , BHP Billiton , Statoil, British Petroleum, and Harmony Gold are all trading down high to mid single digits.
1) Lehman Bros. up 7 percent after state-owned Korea Development Bank confirmed it was in talks about a possible investment. Note that the head of KDB, Min Euoo Sung, was the former head of Lehman's Seoul branch before he joined KDB in June.
2) financials in general are rallying.
3) re-insurers and some insurers in are rallying in Europe on Gustav not the event that was feared.
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