U.S. Lawmakers Finalize Financial Reforms

Arthi Gupta, Mayank Mehta and Sanjay Barot
25 Jun, 2010
New York City

U.S. stocks trade sideways and the U.S. committee of lawmakers approved financial reforms, two years after financial crisis that nearly brought down the financial system. U.S. revised the first quarter economic growth estimate downwards to 2.7% from the previous estimate of 3%.

[R]9:45 AM New York – U.S. stocks trade sideways and the U.S. committee of lawmakers approved financial reforms, two years after financial crisis that nearly brought down the financial system. U.S. revised the first quarter economic growth estimate downwards to 2.7% from the previous estimate of 3%.[/R]

Mixed trends were seen across the Asian and European markets ahead of the G20 summit in Canada. BP Plc provided an update on developments in the response to the MC252 oil well incident in the Gulf of Mexico.

Leaders from the G20 group of nations begin a two-day summit in Toronto, Canada on Saturday. The European Union has called for a coordinated exit strategy from stimulus measures, while the U.S. has been urging world leaders not to put the global recovery at risk by withdrawing support measures too quickly.

Economic activity in the first three months of the year grew by less than previously estimated, according to the Commerce Department’s revised estimate on first quarter gross domestic product, with this marking the second downward revision to the pace of growth.

The Commerce Department said that GDP increased at an annual rate of 2.7% in the first quarter compared to the 3.0% growth estimated last month in the second estimate.

The U.S. Congressional negotiators approved a final version of the regulatory-overhaul bill that envisages sweeping financial reforms in the country.

The biggest reform of U.S. financial regulation since the Great Depression comes two years after the American financial system faced a near-collapse.

On a party-line vote, the House negotiators voted 20-11 and the Senate conferees voted 7-5 to approve the bill. The proposed bill bans proprietary trading, and limits hedge-fund investment.

The regulatory bill strengthens oversight of derivatives and creates consumer protection bureau at the Federal Reserve. The full financial regulatory bill will be put to vote in the House and the Senate next week.

Leaders from eight of the world''s largest democracies are gathering in rural Ontario, Canada today, as the G8 kicks off what may be its final summit. G8 members are the United States, Russia, France, Italy, the UK, Canada, Japan, and Germany.

The G8 will also focus on progress in delivering promised aid to Africa, with leaders meeting with invited representatives from that continent on the sideline of the summit.

On Saturday, Obama and the other G8 heads of states will meet in Toronto for the G20 summit.

The US is expected to press for continued economic stimulus measures from Europe and Asia, arguing that the global economy needs to be put on solid footing before austerity measures should be implemented.

Climate change and financial reform are also on the agenda at the meeting.

BP Plc reported today it has spent $2.35 billion to date to clean up, contain and payout claims and grants to the states on the Gulf of Mexico that have been impacted by the U.S.''s largest oil spill.

The amount of oil collected on Wednesday was lower than previous days because a cap that connects the Deep Water Horizon oil rig''s failed blowout had to be replaced after a collision with an underwater robot. Despite this, the containment system collected or burned 16,830 barrels of oil.

U.S. government experts estimate that the leak is between 35,000 barrels to 60,000 barrels of oil into the gulf every day.

Commodities, Currencies and Yields

Dollar edged against euro to $1.2284 and increased against the Japanese yen to 89.65.

Crude oil decreased $0.17 to $76.34 a barrel for a front month contract, natural gas edged lower $0.02 cent to $4.75 per mBtu and gasoline decreased 1.380 cents to 207.97 cents.

Gold increased $2.20 in New York trading to close at $1,248.10 per ounce, silver closed lower $0.036 to $18.74 per ounce and copper for the front month delivery decreased 1.800 cents to $3.00 per pound.

Yields on 10-year U.S. bonds increased to 3.12% and on 30-year U.S. bonds traded at 4.08%.

Stock Movers

Blockbuster Inc., the video-rental chain fell 1.7%.

The Finish Line, Inc. dropped 4.4% after the athletic apparel retailer reported first-quarter sales of $282.4 million.

Earnings Review

Accenture plc ((ACN)), the technology outsourcing and consulting firm said third quarter revenues rose 8% to $5.57 billion from $5.15 billion a year ago. Net income in the quarter rose 10.5% to $490.6 million or 73 cents per diluted share compared to net income of $444.0 million or 68 cents per share a year ago.

H&R Block, Inc. ((HRB)), the tax preparation company said fourth quarter sales fell 5.3% to $2.34 billion from $2.47 billion a year ago. Net income in the quarter fell 2.3% to $690.8 million or $2.10 per diluted share compared to net income of $707.0 million or $2.08 per share a year ago.

Oracle Corporation ((ORCL)), the database software maker said fourth quarter revenues rose 38.6% to $9.51 billion from $6.86 billion a year ago. Net income in the quarter rose 25% to $2.36 billion or 46 cents per diluted share compared to net income of $1.89 billion or 38 cents per share a year ago.

Research in Motion Limited ((RIMM)), the smartphone mobile handset maker said first quarter revenues rose 24% to $4.24 billion from $3.42 billion a year ago. Net income in the quarter rose 19.6% to $769.0 million or $1.38 per diluted share compared to net income of $643.0 million or $1.12 per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 190.86 or 1.92% to 9,737.48, Hang Seng index in Hong Kong decreased 42.70 or 0.21% to 20,690.79 and CSI 300 index in China lower 21.21 or 0.77% to 2,736.29. ASX 200 index in Australia decreased 66.70 or 1.49% to 4,413.00. The FTSE Bursa KL Composite index in Malaysia closed higher 0.58 or 0.04% to 1,326.45.

The Kospi Index in South Korea decreased 10.03 or 0.58% to close at 1,729.84. SET index in Thailand closed higher 0.48 or 0.06% to 793.67 and JSE Index in Indonesia increased 32.93 or 1.13% to 2,947.02. The Sensex index in India decreased 155.71 or 0.88% to 17,574.53.

Europe Markets Review

In London FTSE 100 Index closed lower 31.68 or 0.62% to 5,068.55, in Paris CAC 40 Index decreased 25.12 or 0.71% to 3,530.24 and in Frankfurt DAX index traded lower 45.21 or 0.74% to 6,070.27. In Zurich trading SMI decreased 22.74 or 0.36% to 6,297.88.