Money Markets Remain Tight

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

European stocks closed higher led by a rise in financials, banks, and insurance stokcks. Money markets continue to struggle as banks show unwillingness to lend each other. Interbank loan rates reached near record high for the year for lending in euro and pound. The recent liquidity measures from the Bank of England and ECB have failed to ease the money markets. Separately, Swiss Life reported higher than expected earnings on sale of two units and a private bank.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – A strength in financial stocks led the European markets higher.[/R]

Global Markets Update

Money markets in Europe seize up again and rates that bank charge rose to recent highs today. Libor rate in pound rose 6% from 5.76% at the end of February and Euribor rate jumped to 4.73%. The recent central bank auction has failed to convince banks to lend money to each others. The spread between the euro rates that bank charges and at which banks borrow money increased to 72 points, 1 point below its widest margin for the year.

European markets advanced on strengths in insurance, banks, and mining stocks.

Swiss Life soared 7% after it reported 44% rise in profit to 1.37 billion francs after it sold subsidiaries in Belgium and Holland and a private bank and contributed 471 million francs. Swiss Life proposed 17 francs of dividend, a rise from 7 francs from a year ago. Total premiums in the year rose 10%.

Man Group, the largest listed hedge funds operator, gained 3% after it said that earnings will top expectations.

Compass Group, food service provider to institutions, jumped 3.5% after it reported higher than expected earnings.

SAP, largest European software maker fell 4% after Oracle reported its earnings and missed sales estimates.

U.S. stocks at the opening traded lower after another round of lowered earnings estimates, loss at home builder Lennar, and Oracle reported lower than estimated earnings. Nasdaq and S&P 500 tracked lower on weak technology stocks. Google, Intel and Oracle led the decliners in the tech sector. Oil jumped to a record high above $107 on a fire in Iraq.

Lennar swung to a quarterly loss on 64% decline in revenue. Fourth quarter GDP rose at a seasonally adjusted annual rate of 0.6%. Stocks in Shanghai fell 4% but better than expected earnings in Hong Kong reversed earlier losses. European markets are trading up.

Stocks in Japan and Asia fell on lowered earnings expectations at four largest U.S. banks and talks of a hike interest rate in Japan dominated the news. In Tokyo trading Nikkei 225 fell 0.8% or 102.05 to 12,604.58, and the broader Topix Index declined 0.9% or 11.11 to 1,226.44. The Bank of Japan board member in a speech suggested that rate should be lifted to cover easy credit conditions. Mitsui will take 20% in a joint venture with Qatar to develop a city project for $3.9.

Hong Kong closed higher after it reversed earlier losses on better than expected earnings from several companies. Banks and property companies led the gainers. In Hong Kong trading Hang Seng Index regained from a 0.21% slump in the morning session to close up 0.21% or 47.21 to 22,664.22. In Shanghai trading, the CSI Index fell 4.23% or 165.45 to 3,748.92. Cheung Kong, Citic Bank, CNOOC and Hutchison beat market expectations.

Australian stocks fell in the session. January domestic traffic at Qantas increased to 1.35 million and international traffic fell 4.6% to 731,000. Overall traffic in January increased to 3.23 million, up 5.6% from a year ago in the month. AWB Ltd gained 6% after U.S. court dismissed a case against it. Asset manager Babcock & Brown and a consortium of banks agreed to extend $2.8 billion in debt to 2011. Spotless Gold made a $556 million hostile offer for Programmed Maintenance Services Ltd.

European Markets indexes

In London FTSE 100 Index closed higher 57.10 or 1.01% to 5,717.50, in Paris CAC 40 Index increased 42.85 or 0.92% to close at 4,719.53 and in Frankfurt DAX index higher 88.80 or 1.37% to close at 6,578.06. In Zurich trading SMI increased 80.41 or 1.12% to close at 7,264.96.

North American Markets indexes

Dow Jones Industrial Average declined 120.40 or 0.97% to a close of 12,302.46, S&P 500 closed down 15.37 or 1.15% to 1,325.76, and Nasdaq Composite Index decreased 43.53 or 1.87% to a close at 2,280.83. In Toronto TSX Composite closed up 13.92 or 0.10% to 13,405.78.

Of the 30 stocks in Dow Jones Industrial Average, 2 closed higher, 28 closed lower, and none were unchanged.

Intel led the decliners in the Dow Jones index with a loss of 3.5% followed by losses in Bank of America of 3%, in JP Morgan of 2.8%, in Boeing of 2.73%, in Alcoa of 1.8%, and in Microsoft of 1.79%. Coca Cola and Merck were the only two gainers in the index with a rise of 0.26% and 0.18% respectively.

Of the stocks in S&P 500 index, 107 stocks increased, 392 declined, and 1 was unchanged. Of the stocks in the index, 67 stocks fell more than 3% and 10 gained more than 3%.

MEMC Electric Materials led the decliners in the S&P 500 index with a fall of 10% followed by losses in Lehman Brothers of 9%, in WAMU of 8.4%, in International Game Technology of 7.7%, and in Apollo Group of 7.5%.

Clear Channel led the gainers in the S&P 500 index with a rise of 10% followed by increases in ConAgra Foods of 7.1%, in McCormick of 4.79%, in EBay of 4.3%, and in Total Systems Services of 4%.

South American Markets Indexes

In Latin Markets Peru led the gainers in the region with a rise of 2.87% followed by increases in Chile of 0.69%, and in Argentina of 0.19%. Brazil led the decliners in the region with a loss of 1.06% followed by losses in Colombia of 0.56%, in Mexico of 0.23% and Venezuela of 0.16%.

Asian Markets

In Tokyo Nikkei 225 Index closed lower 102.05 or 0.80% to 12,604.58, in Hong Kong Hang Seng index increased 47.21 or 0.21% closed to 22,664.22. Australia ASX 200 index decreased 9.80 or 0.18% to close 5,371.60. In Malaysia KL Composite index increased 8.61 or 0.69% closed to 1,254.03.

In South Korea Kospi Index decreased 3.43 or 0.20% to close at 1,676.24, in Thailand SET index closed higher 5.39 or 0.66% to 822.96 and Indonesia JSE Index edged increased 10.71 or 0.44% to 2,451.35. Sensex index in India decreased 71.27 or 0.44% to 16,015.56.

Commodities, Metals, and Currencies

Crude oil increased $1.29 to close at $107.19 a barrel for a front month contract, natural gas decreased 1 cent to $9.68 per mBtu, and gasoline futures decreased 2.74 cents to close at 271.55 cents per gallon.

Gold increased $0.20 in New York trading to close at $954.00 per ounce, silver closed up $0.17 cents to $18.55 per ounce, and copper for front month delivery increased 14.80 cents to 387.30 per pound.

Wheat futures decreased 19.00 cents in Chicago trading and closed at $10.14 per bushel. Sugar decreased 17.00 cent to 12.07 cents per pound. Soybean future closed down 24.75 cents to $13.27 a bushel.

Dollar edged higher and traded near a record low against euro to $1.5768 and edged lower against yen to 99.76.

Bond Yields increased for 10-year U.S. bonds and closed at 3.54% and on 30-year bonds increased to close at 4.39%.