Global Markets Losses Extend to NY; MF Global Confirms Fund Diversion

Bikram Pandey
01 Nov, 2011
New York City

U.S. indexes declined 2% after fresh worries on Greek accord resurfaced. Greek government may fall as early as Friday and Greece may put to test recently agreed debt restructuring to a popular vote. MF Global Holdings Ltd confirmed to federal regulators that client funds may have been diverted.

[R]4:30 PM New York – U.S. indexes traded down and declined 2% after fresh worries on Greek accord resurfaced. Greek government may fall as early as Friday and Greece may put to test recently agreed debt restructuring to a popular vote. MF Global Holdings Ltd confirmed to federal regulators that client funds may have been diverted.[/R]

U.S. indexes declined on the renewed worries about the euro zone and growing scepticism about the recent debt accord. Market volatility resumed after Greece decided to seek a referendum on the EU bailout that may be three months away.

In addition, Greek government may face a new challenge on Friday. Prime Minister George Papandreou government faces a revolt and his majority in parliament is trimmed to two and six additional members of his party are seeking his resignation.

Market tensions were high on the worries that the Greek government may fall and Greece may reject bailout conditions in January in a popular vote. The uncertain outcome prompted another meeting between French President Nicholas Sarkozy and German Chancellor Angela Merkel.

Greece will join Portugal, Ireland and Slovakia where governments fell after agreeing to implement European Union brokered austerity measures or rescue fund expansion.

The bond yields rose in Europe and spreads of Italian and Spanish bonds to German bunds surged to a new record since the creation of the euro. The euro declined against the dollar.

In New York trading weak reading on manufacturing also added to market jitters after China and UK also showed weaker than expected manufacturing index growth.

Market nerves were frayed after several hundred million dollars of clients’ money are missing at a futures broker MF Global Holdings Ltd that sought bankruptcy protection in New York. The company officials confirmed to federal regulators that the company diverted client funds to support its trading.

In earnings news, American Tower third quarter net swung to $15.7 million. Baker Hughes third quarter net soared to $706 million. BB&T to acquired BankAtlantic. Pfizer third quarter net surged to $3.7 billion. Thomson Reuters third quarter net increased to $381 million. Allstate net declined 55% to $165 million.

European markets plunged after Greece decided to seek a referendum on EU bailout terms. The surprise decision stunned the European markets with indexes plunging more than 5% in the region.

The Nikkei index in Tokyo declined on fresh worries in the euro zone. The yen traded near its 3-month high after finance ministry intervened in the currency market. Japanese auto makers suffer production delays till December on Thai floods.

Australian indexes declined tracking weak markets in Asia and Reserve Bank of Australia lowered rate by 25 basis points to 4.5%. Home prices declined for the third quarter in a row with Brisbane leading the fall.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond closed down to 1.98% and 30-year bond declined to 2.99%.

The U.S. dollar gained to $1.372 to one euro and closed higher against the Japanese yen to 78.35 yen after Japanese finance ministry intervened.

Immediate delivery futures of Texas crude oil decreased $1.81 to $91.38 a barrel and futures of natural gas decreased 15 cent to $3.78 per mbtu and gasoline prices increased 0.3 cents to 260.80 cents a gallon.

In metals trading, copper decreased 12.25 cents to $3.50 per pound, gold fell $7.90 to $1,717.30 per ounce and silver declined $1.24 to $33.11.