Wachovia Sub-prime Loss, Market Falls

123jump.com Staff
09 Nov, 2007
New York City

U.S. market averages fell sharply in the morning as losses keep mounting related to subprime loans. Wachovia Bank, fifth largest bank, reported adddtional loss in sub-prime portfolio of $1.1 billion. Market had sought refuge from the losses in the sub-prime market in the tech stocks. In th last two days tech have declined as well. Dow and S&P 500 were down 1.5% and Nasdaq 2%.

[R]11:00AM New York – U.S. market averages dropped sharply in the morning trading on the further weakness in sub-prime mortgage markets.[/R]

Market averages quickly declined at the opening in New York after one hour of trading on weak earnings from Qualcomm and more losses reported in the sub-prime portfolio.

September U.S. trade deficit fell 0.6% to $56.45 billion from revised $56.80 billion in August. In September, exports increased 1.1% to $140.15 billion and imports increased 0.6% to $196.60 billion. Total crude oil import in September was $20.38 billion compared to $21.73 billion.

Wachovia Bank ((WB)) said that it will take $1.1 billion in pre-tax charge due to weaker sub-prime mortgage market. Wachovia reported its exposure to mortgage backed securities to $2.1 billion and to collateralized debt was near $675 billion at the end of the October.

Wachovia fell $1.46 to $38.85 in the morning trading.

Qualcomm ((QCOMM)) reported fourth quarter revenue of $2.31 billion, up 15% from a year ago and 1% from the third quarter. Net income in the quarter increased to $1.13 billion, up 84% from a year ago and 42% from the previous quarter.

Qualcomm projected first quarter revenue to rise between 14% and 19% to between $2.3 billion and $2.4 billion and earnings per share of between 42 cents and 44 cents an increase between 11% and 16%.

Qualcomm fell 5% or $1.99 to $37.77 after the news.

European markets fell across the region led by weakness in banking stocks. The Netherlands and Switzerland led the decliners with a loss of 2.4% followed by losses in Italy of 1.9%, in Norway of 1.6%, in France of 1.4%, in UK of 1.1%.

Allianz ((AZ)) reported third quarter profit of 1.92 billion euros compared to 1.59 billion euros a year ago on revenue rise of 1.8% to 23 billion euros. Two months ago Allianz had estimated sub-prime loan exposure of 1.7 billion euro.

Barclays fell sharply on the rumors denied by the company that it has suffered losses of $10 billion in its mortgage securities portfolio. In Italy, Banca Monte Paschi dropped 9% on analyst downgrade after it acquired Banca Antonveneta.

Asian markets closed lower on weakness in banking stocks. Singapore led the decliners in the index with a loss of 2% followed by losses in Japan of 1.2%, in Shanghai of 1%, in Malaysia of 0.7%. Indonesia led the gainers with a rise of 1.10% followed by increases in Korea of 0.6%, in Australia of 0.6%, and Taiwan and Philippines of 0.4%.

Banks faced wave of selling in Tokyo after the news of losses at Mizuho Securities in the Nikkei newspaper. The report said that the proposed merger between Mizuho Securities and Shinko Securities is likely to be delayed due to the possible losses from the sub-prime securities tied to the U.S. mortgage market. The losses may exceed 100 billion yen.
Mizuho Financial Group, parent of Mizuho Securities, fell 6% and Shinko Securities declined 5.5%.

Banks in Hong Kong lowered the rates by 25 basis points to 7% lifted property stocks.

Korean stocks advanced on possible bids for Hanarotelecom from SK Telecom and Mcquarie Bank led consortium. The two telecom stocks gained on the news.

Markets in India were closed for Diwali celebration.