Central Banks Pump Liquiditiy

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

European financial markets advanced more than 1% on the Central banks adding liquidity. German investor confidence in March rose as companies cope with the rising euro. Dubai controlled fund agreed to pay 1.19 euros per share to acquire a controlling interest in Spanish construction company Colonial SA. EADS fell 7% in Paris trading after it reported a loss in 2007 of 446 million euros or 56 cents per share on sales decline of 0.8%. The company earned 99 million euros or 12 cents per share.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – The Fed in an coordinated move with the central banks in Canada, Europe, UK, and Australia offered to add $200 billion liquidity to credit markets and is prepared to accept wider quality of collateral. U.S. banks, financials, and consumer stocks surged.[/R]

Global Markets Update

The Federal Reserve Bank in coordination with other central banks offered to add liquidity of $200 billion to credit markets and accept wider securities as collateral. The second coordinated move in four months is designed to increase the willingness among traders to boost confidence and provide incentives to trade. The ECB will offer up to $30 billion in short term auction and the Swiss National Bank will offer up to $6 billion. The Reserve Bank of Australia added $721 million in liquidity.

U.S. market averages surged nearly 4% on the Fed move lifting stocks across all sectors. Of the S&P 500 stocks, 23 stocks soared more than 10% and 303 closed above 3%. Of the Dow Jones Index 29 gained and 16 added more than 3%.

European financial markets advanced more than 1% on the central banks adding liquidity. German investor confidence in March rose as companies cope with the rising euro. Dubai controlled fund agreed to pay 1.19 euros per share to acquire a controlling interest in Spanish construction company Colonial SA. EADS fell 7% in Paris trading after it reported a loss in 2007 of 446 million euros or 56 cents per share on sales decline of 0.8%. The company earned 99 million euros or 12 cents per share.

The Bank of England in a coordinated move along with central banks in Europe, Canada, and Australia offered to inject liquidity and accept wider collateral. Markets in Europe, Canada, and U.S. rallied. In London trading FTSE 100 stocks rose 1.09% or 61.3 to 5,690.40. Of the FTSE 100 stocks 67 rose, 33 declined and 2 were unchanged. Cairn Energy led advancers in the FTSE 100 index shares with a rise of 8.06% followed by Standard Life adding 5.42%.

Stock averages in Japan rebounded after investors looked for bargains in commodity-related stocks that have traded lower in the recent weeks. In Tokyo trading Nikkei 225 gained 0.05% or 6.54 to 12,538.67, and the broader Topix Index rose 0.9% or 10.76 to 1,235.15. Sky Perfect JSAT led advancers in the Nikkei 225 index shares with a rise of 10.93%. Ajinomoto Co. Inc led decliners with a fall of 4.61%.

February consumer price inflation in China surged to 8.7%, the highest increase in 12 years. Severe weather conditions played a key role in lifting food price surge above 25%. Hong Kong stocks recovered from a 2% dip in the morning session to close up 1.3% as bargain hunters braved in. Utilities, insurance, and telecom stocks added. Sinopec fell after a government imposed price freeze on refined products.

Stocks in India rebounded ahead of U.S. Fed and European central banks plan to add liquidity to the credit markets. DLF led the surge in realty stocks. GAIL India surged 7% after it increased spending on pipeline projects and it said it plans to issue bonus shares. ACC jumped 6% on the sale of a unit to HNG Group for 400 crore rupees. Tata Motors plan to raise $1 billion in international markets to pay for the Jaguar and Land Rover from Ford.

European Markets

In London FTSE 100 Index closed higher 61.30 or 1.09% to 5,690.40, in Paris CAC 40 index increased 60.70 or 1.33% to close at 4,627.69 and in Frankfurt DAX index higher 76.49 or 1.19% to close at 6,524.57. In Zurich trading SMI increased 88.00 or 1.25% to close at 7,143.01.

North American Markets indexes

Dow Jones Industrial Average surged 416.66 or 3.55% to a close of 12,156.81, S&P 500 closed up 47.28 or 3.71% to 1,320.65, and Nasdaq Composite Index soared 86.42 or 3.98% to a close of 2,255.76. In Toronto TSX Composite closed jumped 339.44 or 2.61% to close at 13,344.53.

Of the 30 stocks in Dow Jones Industrial Average, 29 closed higher, 1 closed lower, and none were unchanged.

American Express led the gainers in the index with a rise of 8.5% followed by increases in Citigroup of 7.8%, in JP Morgan Chase of 5.7%, in Bank of America of 5.5%, and in Caterpillar of 5.4%. Boeing was the loner decliner with a loss of 1.4%.

Of the stocks in S&P 500, 479 closed higher, 21 fell, and none were unchanged. Of the index stocks, 303 rose more than 3% and 8 stocks fell more than 3%.

Wellpoint led the decliners in the index with a fall of 28.3% followed by losses in Humana of 24.4%, in United Health Group of 15%, and in Coventry Health of 13%. Washington Mutual led the gainers in the index with a rise of 18.3% followed by increases in SLM Corp of 18%, in MGIC Investment of 17.8%, in Countrywide Financial of 17%, and in Freddie Mac of 16%.

South American Markets Indexes

In Latin Markets Mexico led the gainers in the region with a rise of 4.46% followed by increases in Brazil of 3.95%, in Argentina of 2.09%, and in Chile of 2.40%. Peru added 1.79% but Venezuela fell 0.64% and Colombia increased 0.13%.

Asian Markets
In Tokyo Nikkei 225 Index closed higher 126.15 or 1.01% to 12,658.28, in Hong Kong Hang Seng index increased 290.30 or 1.28% closed to 22,995.35. Australia ASX 200 index decreased 46.20 or 0.89% to close 5,134.20. In Malaysia KL Composite index increased 33.32 or 2.84% closed to 1206.54.

In South Korea Kospi Index increased 16.31 or 1.00% to close at 1,641.48, in Thailand SET index closed higher 13.18 or 1.63% to 819.83 and Indonesia JSE Index edged decreased 4.33 or 0.17% to 2,523.53. Sensex index in India increased 199.43 or 1.25% to 16,123.15.

Bond Yields increased on 10-year U.S. bonds to 3.60% and on 30-year bonds declined to 4.51%.

Commodities, Metals, and Currencies

Crude oil increased $0.85 to close at $108.75 per barrel for a front month contract, natural gas decreased 1 cent to $10.02 per mBtu, and gasoline futures increased 0.46 cents to close at 271.95 cents per gallon.

Gold increased $4.20 in New York trading to close at $976.00 per ounce, silver closed down 2 cents to $19.76 per ounce, and copper for front month delivery decreased 0.95 cents to 378.55 per pound.

Wheat futures increased 60.00 cents in Chicago trading and closed at $12.23 per bushel. Sugar increased 44 cent to 13.48 cents per pound. Soybean future closed up 1.250 cents to $14.07 per bushel.

Dollar edged higher and traded near a record low against euro to $1.5317 and edged higher against yen to 103.51.