Third Day Decline in Banks

123jump.com Staff
10 Mar, 2008
New York City

The ongoing U.S. credit market turmoil may force Carlyle Capital to face liquidation of $16 billion portfolio if lenders and the company do not reach an agreement. Bovis Homes plunged after it reported 17% decline in second half profit. Havas, Paris based ad agency, reported 4% rise in 2007 revenue of 1.5 billion and net income of 83 million euros compared to 46 million euros a year ago. Hypo Real Estate plunged 14% on the worries related to earnings.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – European banks declined for the third day in a row Base and precious metals fell on the U.S. economic worries. Oil traded at a record high.[/R]

Global Markets Update

European stocks fell for the third day in a row on the worries that the U.S. economic slowdown will hurt corporate profits. Dollar traded at a record low against the euro and oil reached a new high. Veolia dropped 4% after analysts lowered their revenue growth targets and wondered about the large debt loads. Air France-KLM board authorized the company to bid for Alitalia SpA.

German exports and trade surplus in January rose. The EU27 external current account recorded a deficit of 19.0 billion euro in the fourth quarter of 2007, as compared with a deficit of 21.5 billion in the fourth quarter of 2006 and a deficit of 17.2 billion in the third quarter of 2007. In the fourth quarter of 2007, the EU27 external balance of trade in services recorded a surplus of 26.0 billion euro, as compared with a surplus of 17.9 billion in the fourth quarter of 2006 and a surplus of 23.2 billion in the third quarter of 2007.

U.S. stocks fell sharply on the familiar worries about the economic conditions and persistent weakness in the credit market. Dollar fell again and oil rose to a record high. Oil fell at the opening but quickly recovered from its loss of 1% to close at a record high. McDonalds reported a rise in same store sales in February on system-wide sales rise.

Nationwide ((NFS)) received $47.20 per share or $2.2 billion buyout bid from a controlling group of a shareholder. The group consists of Nationwide insurance companies and Nationwide Corp. The stock rallied after the news and traded above the offer price. The Nationwide stock traded as high as $65.50 last year and as low as $32 in the last five years. The company offer may be revised above $52 per share according to 123jump.com estimate.

Bear Stearns ((BSC)) plunged 10% after rumors circulated that it faces liquidity crunch. The company denied the rumors. Banks, brokers and insurance companies are trading at their lows last seen five to ten years ago. Fears of more credit market losses dragged stocks in the banking sector to their seven year lows. Bear Stearns closed at a level last seen in 2002, Fannie Mae at 1993 level, Citigroup at 1998, Lehman Brothers at 2004 level, and Merrill at the year 2000 level.

Familiar worries of the U.S. economic malaise dragged mining and banks lower in the UK. Rio Tinto and BHP Billiton declined 6% after the weak trading in the U.S. and in the European region. Copper, zinc, nickel, tin, and led prices in London declined. HSBC fell on the persistent uncertainty related to credit markets. Bovis Homes Group plunged 12% and led the home builder lower after it reported lower earnings and said that home prices may not rise in 2008. Persimmons dropped 4% and Taylor Wimpey lost 6%.


European Markets

In London FTSE 100 Index closed lower 70.80 or 1.24% to 5,629.10, in Paris CAC 40 index decreased 51.97 or 1.13% to close at 4,566.99 and in Frankfurt DAX index lower 65.91 or 1.01% to close at 6,448.08. In Zurich trading SMI decreased 119.14 or 1.66% to close at 7,055.01.

North American Markets indexes

Dow Jones Industrial Average fell 153.54 or 1.29% to a close of 11,740.15, S&P 500 closed down 19.99 or 1.55% to 1,273.38, and Nasdaq Composite Index traded down 43.15 or 1.95% to a close of 2,169.34. In Toronto TSX Composite closed lower 264.50 or 1.99% to close at 13,017.22.

Of the 30 stocks in Dow Jones Industrial Average, 3 closed higher, 27 closed lower, and none were unchanged.

Citigroup led the decliners in the index with a loss of 5.8% followed by declines in General Motors of 5.2%, in Bank of America of 4%, and in American Express 3.6%. McDonald’s led the gainers in the index with a rise of 2.2 followed by rises in Microsoft of 0.83%, and in Intel of 0.4%.

Of the stocks in S&P 500, 52 closed higher, 443 fell, and 5 were unchanged. Of the index stocks, none rose more than 3% and 104 stocks fell more than 3%.

Ambac led the decliners in the index with a plunge of 23% followed by losses in Countrywide of 14%, in Fannie Mae of 13%, in Freddie Mac of 11.8%, and in Bear Stearns of 11.37%. Apollo Group led the gainers in the index with a rise of 2.8% followed by rises in Medco of 2.65%, in General Mills of 2.4%, in Reynolds America of 2.4%, and in Constellation Brands of 2.3%.

South American Markets Indexes

In Latin Markets Brazil led the decliners in the region with a fall of 2.89% followed by decreases in Mexico of 1.38%, in Argentina of 1.37%, and in Chile of 1.11%. Peru fell 0.64% but Venezuela rose 0.37% and Colombia increased 0.13%.

Asian Markets

In Tokyo Nikkei 225 Index closed lower 250.67 or 1.96% to 12,532.13, in Hong Kong Hang Seng index increased 203.72 or 0.91% closed to 22,705.05. Australia ASX 200 index decreased 83.60 or 1.59% to close 5,180.40.

In South Korea Kospi Index decreased 38.80 or 2.33% to close at 1,625.17, in Thailand SET index closed lower 14.92 or 1.82% to 806.65 and Indonesia JSE Index edged decreased 128.59 or 4.84% to 2,527.87. Sensex index in India decreased 51.80 or 0.32% to 15,923.72. Malaysia plunged 9.50% or 123.11 to 1,173.22 on the election results.


Bond Yields decreased on 10-year U.S. bonds to 3.45% and on 30-year bonds declined to 4.46%.

Commodities, Metals, and Currencies

Crude oil increased $2.73 to close at $107.88 per barrel for a front month contract, natural gas increased 26 cent to $10.02 per mBtu, and gasoline futures increased 2.16 cents to close at 271.59 cents per gallon.

Gold decreased $2.40 in New York trading to close at $971.80 per ounce, silver closed down 46 cents to $19.79 per ounce, and copper for front month delivery decreased 12.65 cents to 379.50 per pound.

Wheat futures increased 58.00 cents in Chicago trading and closed at $11.63 per bushel. Sugar decreased 22 cent to 13.14 cents per pound. Soybean future closed down 2.250 cents to $14.06 per bushel.

Dollar edged lower and traded near a record low against euro to $1.5348 and edged lower against yen to 101.7250.