U.S. Housing Data Lift Sentiment; Visa, MasterCard Plunge

Bikram Pandey
17 Dec, 2010
New York City

U.S. stocks turned positive after housing starts rose 3.9% and initial jobless claims declined. Spain paid a premium rate of 5.45% to sell $3.2 billion 15-year bonds. Visa Inc and MasterCard Inc plunged as much as 12% after Fed proposed to limit interbank debit card charges.

[R]4:00 PM New York – U.S. stocks turned positive as investors focused on housing market data. U.S. housing starts rose 3.9% and initial jobless claims declined. Spain paid a premium rate of 5.45% to sell $3.2 billion 15-year bonds. Visa Inc and MasterCard Inc plunged as much as 12% after Fed proposed to limit debit card charges.[/R]

U.S. stocks turned positive in the afternoon after weekly jobless claims fell and housing starts rose more than anticipated.

The Basel Committee of Banking Supervision, the panel responsible for banking rules that are implemented by G20 nations said that 94 largest banks have only 83% of cash in the emergency situation and if short term funding was not available.

On the other hand smaller 263 banks are better capitalized and would have 95% of the capital needed in the similar situation. Smaller banks are expected to meet their capital shortfall of €25 billion with only one year of profit.

The panel also estimated that the large banks would be short of €577 billion under the new guidelines drafted and will have until the end of 2018. These banks may take several years to meet the revised requirements as their collective profit in 2009 was only €209 billion.

Visa Inc ((V)) and MasterCard Inc ((MA)) dropped as much as 12% after the latest guidelines from the U.S. Fed may slash debit card interbank charges by as much as 90%. The Fed guidelines plan to limit charge per transaction to 12 cents from the current 1%.

FedEx gained 2% after the package shipping company reported second quarter revenue surged 12% to $9.63 billion and raised full-year estimate on the expected decline in costs.

Nasdaq OMX agreed to repurchase 22.8 million of its shares from Borse Dubai Ltd for $497 million.

U.S. sued BP Plc, Anadarko and Transocean and several other companies for the alleged environmental and other violations that led to the largest offshore oil spill in the U.S. history.

The European indexes fell ahead of the EU leaders meeting in Brussels. Spain completed €2.4 billion bond offering at 31% higher yield than the previous auction in October.

Euro area inflation remained flat in November. German private sector output improved and French private sector growth slowed in December. Swiss National Bank held key rate.

The UK indexes closed lower and retail sales rose in November. Irish GDP expanded 0.5% in the third quarter and factory gate prices remained stable in November. Rolls-Royce secured $89 million contract for U.S. Navy T-45 trainer engine support.

Tokyo stocks stayed flat amid softer yen and debt worries from Europe. United States pledged to work closely with Japan and Europe for new sources of rare earth supplies. Bank of Japan started its new asset purchase program with 14 trillion yen exchange traded fund purchase.

China region key stock indexes drop on inflation concerns. China’s U.S. Treasury holding increased 2.6% to a record $906.8 billion in November. Chingqing Rural Commercial Bank gains 4.6% on its first day of trading in Hong Kong.

Mumbai stocks gained in late trade after Reserve Bank of India left interest rates unchanged and eased liquidity and bond yields fell. The RBI left cash reserve ratio unchanged at 6%. Indirect tax collections reach 66% of the target in the fiscal year to November.

Camlin Fine Chemicals entered into a pact to acquire Italy based Borregaard. Ispat Industries may be acquired by Steel Authority of India. Suzlon Energy concluded contract for the delivery of 25 wind turbines.

Australian stocks edged higher as commodities rise in Asia. Rio Tinto sells major portion of its U.S coal assets for $2 billion. Australian lawmakers are still not convinced that the merger between Singapore Exchange and ASX Ltd is in the best interest of the country.

Commodities, Currencies and Yields

Dollar edged fell against euro to $1.32 and dropped against the Japanese yen to 84.08. One UK pound fetched $1.56.

Crude oil decreased $0.76 to $87.86 a barrel for a front month contract, natural gas edged lower 19 cents to $4.03 per mBtu and gasoline decreased 0.06 cents to 230.86 cents.

Gold decreased $18.60 in New York trading to close at $1,367.60 per ounce, silver decreased $0.51 to $28.73 per ounce and copper for the front month delivery decreased 3.85 cents to $4.11 per pound.

Yield on 10-year U.S. bond decreased to 3.46% and on 30-year U.S. bond yield fell to 4.57%.