World Markets On Decline, WaMu to Raise $7 B

123jump.com Staff
08 Apr, 2008
New York City

Global markets were on the decline after the IMF quarterly report estimated $1 trillion in U.S. loan related losses. The estimate put investors on the defensive and urged banks and world financial regualtors to act quickly to improve health of lenders. Separately, Washington Mutual announced a plan to raise $7 billion, including $2 billion from a private equity group TPG Capital led investors. Home builders declined sharply. Coal and other mineral miners surged.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – U.S. stocks were on the defensive after the IMF suggested a protracted and larger than estimates loan losses from mortgage and other leveraged loans.[/R]

Global Markets Update

U.S. stocks fell at close after crude oil jumped and metal prices stayed elevated. Coal and coking coal companies surged in today’s trading after Korean steel maker Posco agree to 205% price increase for coking coal supplied from Australia. Earlier it agrees to 65% price hike for iron supply from Vale based in Brazil. The news of price hike lifted mining and minerals companies in Australia, Europe, Canada and the U.S.

Washington Mutual, battered mortgage lender announced to raise $7 billion from existing shareholders including $2 billion from investment vehicle controlled by TPG Capital. The lender will also lower its quarterly dividend to 1 cents per share and appoint David Bonderman on its board. Earlier report on 123jump.com had suggested that Wamu may raise as much as $5 billion.

WaMu will also appoint Larry Kellner, chairman and chief executive officer of Continental Airlines and former executive vice president and chief financial officer of American Savings Bank, to become a board observer at TPG’s request.

The quarterly dividend will be slashed from 15 cents to 1 cent to preserve $490 million in capital. WaMu also announced preliminary loss of $1.1 billion or $1.40 per share in the first quarter and provision of $3.5 billion and expects first quarter charge-offs of $1.4 billion.

London stock averages fell after a report by mortgage lender HBOS said house prices fell 2.5% in March from the previous month. However, gains by commodity stocks helped trim losses. In London trading FTSE 100 fell 0.41% or 24.6 to 5,990.20. The International Monetary Fund said today that banks and governments should be prepared for rising losses related to U.S. credit markets and estimated that total losses can reach to $1 trillion.

European markets were on the decline after the IMF report suggested that total losses related to U.S. risky loans could reach $1 trillion. The report predicted dire consequences for banks and financial systems if financial regulators and banks do not act quickly. Banks and brokerage stocks across the region fell.

In Tokyo trading Nikkei 225 plummeted 1.49% or 199.8 at 13,250.43, and the broader Topix Index fell 1.8% or 22.94 at 1,282.69. Diet in Japan is expected to vote on the appointment of Masaaki Shirakawa as the BOJ governor. The post had been vacant for the first time in eighty years. Separately, private report showed that corporate bankruptcies rose 7.7% in fiscal 2007, for the second year in a row.

Stocks in India fell after a sell-off in the region on persistent worries related to credit markets. Sensex declined 1.1% or 169 to close at 5,587.62 and CNX Nifty fell 1.1% or 51 to close at 4,709.65. Larsen & Toubro fell 5.1% to 2,581.30 rupees despite the company receiving four orders worth 1,687 crore rupees. Wipro lost 4% and led the decliners among software exporters.

Hong Kong stock indexes fell on resurgent fears of credit market losses that led financial stocks lower. Hang Seng Index fell 1.9% or 267.07 at 24,311.69, and China Enterprises Index fell 1.67% or 223.66 to 13,196.22. Rising commodities prices and weak dollar fueled the inflation worries in the region. China business climate index fell on severe weather condition in the first quarter.

European Markets indexes

In London FTSE 100 Index closed lower 24.60 or 0.41% to 5,990.20, in Paris CAC 40 Index decreased 31.91 or 0.65% to close at 4,912.69 and in Frankfurt DAX index lower 49.05 or 0.72% to close at 6,771.98. In Zurich trading SMI decreased 71.16 or 0.93% to close at 7,568.14.

North American Markets indexes

Dow Jones Industrial Average lost 35.99 or 0.29% to a close of 12,576.44, S&P 500 closed down 7.00 or 0.51% to 1,365.54, and Nasdaq Composite Index decreased 16.07 or 0.68% to a close at 2,348.76. In Toronto TSX Composite closed down 17.48 or 0.13% to 13,727.53.

Of the 30 stocks in Dow Jones Industrial Average, 13 closed higher, 17 closed lower, and none was unchanged.

Citigroup led the decliners in the Dow Jones index with a loss of 3.5% followed by losses in Bank of America of 2.7%, in Intel of 2.6%, and in AIG of 2.5%. Chevron led the gainers in the Dow Jones index with a rise of 1.1% followed by increases in DuPont of 0.9%, in Exxon Mobil of 0.8%, and in Caterpillar of 0.5%.

Of the stocks in S&P 500 index, 179 stocks increased, 318 declined, and 3 were unchanged. Of the stocks in the index, 18 stocks fell more than 3% and 16 gained more than 3%.

Wamu led the decliners in the S&P 500 index with a loss of 11% followed by losses in Lennar of 8.3%, in Novellus Systems of 8.2%, in Countrywide Financial of 6.8%, and in Pulte Homes of 5.9%.
Citrix Systems led the gainers in S&P 500 index with a rise of 7.2% followed by increases in Peabody Energy of 5.3%, in Consol Energy of 4.7%, and in Humana of 4.2%. Allegheny Tech added 4% and Eastman Chemical increased 3.6%.

South American Markets Indexes

Venezuela led the gainers in South American trading with a gain of 1.07% followed by increases in Argentina and Brazil of 0.57%, and in Mexico of 0.04%. Peru led the decliners in the region with a loss of 1.3% followed by losses in Colombia of 0.07% and in Chile of 0.14%.


Asian Markets

In Tokyo Nikkei 225 Index closed lower 199.80 or 1.49% to 13,250.43, in Hong Kong Hang Seng index decreased 267.07 or 1.09% closed to 24,311.69. In Australia ASX 200 index lower 53.50 or 0.95% to close 5,571.50. In Malaysia KL Composite index increased 4.64 or 0.38% closed to 1,225.71.

In South Korea Kospi Index decreased 18.85 or 1.06% to close at 1,754.71, in Thailand SET index closed higher 2.05 or 0.25% to 826.85 and Indonesia JSE Index edged decreased 37.03 or 1.62% to 2,249.77. Sensex index in India decreased 169.46 or 1.08% to 15,587.62.

Commodities, Metals, and Currencies

Crude oil decreased $0.24 to close at $108.85 a barrel for a front month contract, natural gas decreased 8 cent to $9.72 per mBtu, and gasoline futures decreased 2.10 cents to close at 277.77 cents per gallon.

Gold decreased $8.80 in New York trading to close at $918.80 per ounce, silver closed down $0.41 cents to $17.71 per ounce, and copper for front month delivery decreased 9.00 cents to 389.05 per pound.

Wheat futures increased 13.00 cents in Chicago trading and closed at $9.47 per bushel. Sugar decreased 25.00 cent to $11.87 per pound. Soybean future closed down 3.50 cents to $12.51 a bushel.

Dollar edged lower and traded near a record low against euro to $1.5722 and edged lower against yen to 102.41.

Yields on U.S. bonds declined to 3.55% on 10-year bonds and rose on 30-year bonds to 4.37%.