More Banks Raise Capital, Oil Above $117

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

Bank of America earnings plunged 76% on mounting subprime and mortgage losses and it provisioned $6 billion to cover asset write downs. Citigroup plans to sell at least $5 billion of securities to bolster its captial base. National City, the tenth largest U.S. bank cut its dividend to 1 cent from 21 cents and reported a quarterly loss. The embattled bank also sold stock at 40% discount to raise $7 billion.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – U.S. stocks traded sideways after National City, tenth largest bank cut its dividend and sold stock at 40% discount. Bank of America earnings plunged more than 75% and crude oil traded above $117 a barrel.[/R]

Global Markets Update

U.S. stocks fell after Bank of America earnings plunged 76% and reported a provision of $6 billion for loan losses. National City, Ohio based lender nearly eliminated its dividend and raised $7 billion at $5 per share, 40% from its stock price on Friday. Arch Coal jumped 5% after it reported surging earnings and revenues on rising coal prices. Sears Holdings fell after Bank of America declined to renew its credit line.

Bank of America earnings in the first quarter declined 76% to $1.21 billion from $5.26 billion on revenue decline of 6% to $17.30 billion. The bank provisioned $6.01 billion compared to $4.78 billion a year ago on rising trading losses and growing non-performing assets. Nonperforming assets were $7.83 billion, or 0.90 percent, of total loans, leases and foreclosed properties at quarter-end compared to $5.95 billion, or 0.68%, at December 31, 2007 and $2.06 billion, or 0.29%, at the end of first quarter.

The Bank of England unveiled a plan to exchange £50 billion of high quality mortgage loans with UK Treasury bills for a period between one and three years. Private economists said that the plan may not be adequate. In London trading FTSE 100 stocks fell 0.06% to 6,053.00. ITV led the gainers in the index with a rise of 6% and Admiral Group of 4.5%. Hammerson led decliners in the index with a loss of 5% followed by 4% loss in British Air.

Stocks in Tokyo edged higher on growing speculation that U.S. subprime loan losses may remain at current levels. Strong earnings from Caterpillar lifted stocks of Kubota and Komatsu. Honda led gainers in the Nikkei 225 index with a surge of 8% followed by a rise of 7% in NEC. Chip maker, NEC reported better than expected operating profit in 2007.

Giant insurance company Ping An in China is reported to have scrapped its plan to sell stock in public offering and instead sell them a private placement through banks. Ping An rose 5%. Sinopec estimated first quarter profit is likely to fall 50% from a year ago on rising crude oil cost. Separately, China is expected to reimburse refiners taxes on crude oil import and significant losses from the price ceiling. Chinese refiners are required to sell petrol at a price fixed by the government. In addition COSCO jumped 7%.

Stocks in India rallied in sympathy with regional gains. Sensex in Mumbai trading rose 1.6% to 16,739. The Reserve Bank of India ahead of its annual fiscal policy review announced 0.5% increase in cash reserve ratio in an effort to cool the inflation. Wholesale and consumer price inflation indexes have been rising rapidly and are now running near twice the target rate set by the government. Titagarh wagon, new issue, was the most active on BSE trading.

European Markets indexes

In London FTSE 100 Index closed lower 3.50 or 0.06% to 6,053.00, in Paris CAC 40 Index decreased 51.34 or 1.03% to close at 4,910.35 and in Frankfurt DAX index lower 56.53 or 0.83% to close at 6,786.55. In Zurich trading SMI decreased 23.08 or 0.31% to close at 7,394.94.

North American Markets indexes

Dow Jones Industrial Average lost 24.34 or 0.19% to a close of 12,825.02, S&P 500 closed down 2.15 or 0.15% to 1,388.18, and Nasdaq Composite Index increased 5.07 or 0.21% to close at 2,408.04. In Toronto TSX Composite closed up 81.59 or 0.57% to 14,318.65.

Of the 30 stocks in Dow Jones Industrial Average, 14 closed higher, 16 closed lower, and none was unchanged.

AIG led decliners in the index with a loss of 3.5% to $46.54 followed by losses in Bank of America of 2.46% to $37.61, in Caterpillar of 2.29% to $83.33 and in Pfizer of 1.3% to $20.20.

Of the stocks in S&P 500 index, 193 stocks increased, 303 declined, and 4 were unchanged. Of the stocks in the index, 28 stocks fell more than 3% and 24 gained more than 3%.

National City Corp led decliners in the S&P 500 index with a loss of 27.6% followed by losses in First Horizon of 9.4%, in Sovereign Bancorp of 9.2%, in Mattel of 8.2%, in Fifth and Third Banc of 7.5%. Sears Holdings fell 6.9% after Bank of America cut its credit line extension.

Hasbro led gainers in the index with a rise of 9.8% followed by gains in Quest Diagnostic of 7.6%, in CB Richard Ellis of 7.5% and in Hess Corp of 6.9%.

South American Markets Indexes

Mexico led gainers in the South American trading with a rise of 0.94% followed by increases in Chile of 0.81%, in Argentina of 0.69%, and in Brazil of 0.57%. Peru edged 0.03% higher and Venezuela declined 1.90%.

Asian Markets

In Tokyo Nikkei 225 Index closed higher 220.10 or 1.63% to 13,696.55, in Hong Kong Hang Seng index increased 523.89 or 2.17% closed to 24,721.67.

Better than expected earnings from NEC lifted tech stocks and weaker yen against the dollar also helped exporter to rise. Honda led the gainers in the Nikkei 225 index.

In Australia ASX 200 index higher 170.60 or 3.14% to close 5,600.30. In Malaysia KL Composite index increased 12.35 or 0.97% closed to 1,280.00.

In South Korea Kospi Index increased 28.58 or 1.61% to close at 1,800.48, in Thailand SET index closed lower 3.42 or 0.40% to 841.98 and Indonesia JSE Index edged decreased 13.38 or 0.57% to 2,335.89.


Commodities, Metals, and Currencies

Crude oil increased $0.87 to close at $117.56 a barrel for a front month contract, natural gas increased 12 cent to $10.71 per mBtu, and gasoline futures decreased 64 cents to close at 297.24 cents per gallon.

Gold increased $2.40 in New York trading to close at $917.60 per ounce, silver closed down $0.46 cents to $17.36 per ounce, and copper for front month delivery decreased 2.60 cents to $3.866 per pound.

Wheat futures decreased 25.5 cents in Chicago trading and closed at $8.59 per bushel. Sugar decreased 70 cent to $12.59 per pound. Soybean future closed down 46.00 cents to $13.30 a bushel.

Dollar edged lower and traded near a record low against euro to $1.5924 and edged higher against yen to 103.16.

Yields on U.S. bonds increased to 3.71% with 10 years of maturities and decreased 4.47% with 30-year of maturities.