U.S. and Emerging Markets Fall; MBIA Plunges

123jump.com Staff
04 Jun, 2008
New York City

U.S. stocks traded sideways after Moody removed the top bond insurance rating from MBIA and Ambac Financial. Ambac plunged 17% and MBIA lost 16%. Two companies have lost more than 70% of their market value in the last one year of trading. Crude oil futures declined as India joined Malaysia and Indonesia and passed on higher fuel prices to consumers. Brazil fell for the second day more than 1.5% in Latin markets trading. India lost 2.8%.

10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney[R]– U.S. stocks traded in a tight range after a rating agency removes top rating on two largest bond insurance companies.[/R]

Global Markets Update

U.S. stocks were on the decline after another rating agency analyst voiced his concern on adequacy of the capital ratios at Barclays, BNP Paribas, Societe Generale and Lehman Brothers. Home builders Hovnanian and Toll Brothers fell after reported wider than estimated losses. Guess surged nearly 10% after it reported sharply higher earnings. European markets fell more than 1% and in Asian trading India dropped 2.8%. UAL, the parent of United Air plans to shut down its discount carrier Ted and eliminate as many as 1,100 jobs.

Indian government after a heated debate approved price increase for petrol, diesel and cooking gas. The price increase of 5% and lower import duties will help state controlled oil companies to reduce losses. Sensex index fell sharply after the price increase on the fears that record inflation will only rise. The 30-share BSE Sensex fell 2.8% or 447.77 at 15,514.79. On the National Stock Exchange, the S&P CNX Nifty declined 2.8% or 130.3 points at 4,585.60.

Stocks in UK dropped after a business activity index showed a decline in activities in May. Businesses are battling tight credit conditions and low consumer confidence. Luxury home prices are expected to fall 5% by the end of the year. Kingfisher, home renovation retailer reported first quarter earnings jumped 9% to £96 million. Vodafone led decliners in the FTSE 100 index stocks with a fall of 5% followed by losses in London Stock Exchange of 4.5%, in Vedanta Resources of 4% and in BP Plc of 4%.

European Markets indexes

In London FTSE 100 Index closed lower 87.60 or 1.45% to 5,970.10, in Paris CAC 40 Index decreased 68.64 or 1.38% to close at 4,915.07 and in Frankfurt DAX index lower 53.70 or 0.77% to close at 6,965.43. In Zurich trading SMI decreased 75.96 or 1.00% to close at 7,514.48.

North American Markets indexes

Dow Jones Industrial Average fell 12.37 or 0.1% to a close of 12,390.48, S&P 500 closed down 0.45 or 0.03% to 1,377.20, and Nasdaq Composite Index increased 22.66 or 0.91% to close at 2,503.14. In Toronto TSX Composite closed down 38.15 or 0.14% to 14,690.46.

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

Bank of American led the decliners in the Dow Jones index with a fall of 4% followed by losses in General Motors of 3.2%, in Chevron of 1.9% and in Alcoa of 1.8%. Walt Disney led the gainers in the Dow Jones Index with a rise of 3.5%, in American Express of 3%, in Intel Corp of 2.3% and in Procter & Gamble of 1.6%.

Of the stocks in S&P 500 index, 285 stocks increased, 205 declined, and 10 were unchanged. Of the stocks in the index, 25 stocks fell more than 3% and 17 gained more than 3%.

Ambac Financial led the decliners in the S&P 500 index with a loss of 17% followed by losses in MBIA Inc of 16%, in Sunoco of 9%, in CME Group Inc of 5.57%, in Valero Energy of 5.2% and in NYSE Euronext of 4.9%.

McGraw Hill led the gainers in the S&P 500 index with a rise of 6.5% followed by increases in Verisign of 5.8%, in Advanced Micro Devices of 5.6% and in Hasbro inc and Whole Foods Market of 4.4%.

South American Markets Indexes

Brazil led the decliners in the Latin American markets for the second day in a row with a fall of 1.91% followed by decreases in Argentina of 1.86%, in Peru of 0.86% and in Mexico of 0.14%. Colombia led the gainers in the region with a rise of 0.88% followed by increases in Venezuela of 0.28% and in Chile of 0.20%.

Asian markets

In Tokyo Nikkei 225 Index closed higher 226.40 or 1.59% to 14,435.57, in Hong Kong Hang Seng index decreased 252.51 or 1.04% closed to 24,123.25. In Australia ASX 200 index higher 10.30 or 0.18% to close 5,584.50. In Malaysia KL Composite index decreased 4.45 or 0.35% closed to 1,253.12.

In South Korea Kospi Index increased 14.42 or 0.79% to close at 1,833.81, in Thailand SET index closed higher 2.06 or 0.26% to 808.92 and Indonesia JSE Index edged decreased 41.23 or 1.72% to 2,362.59. Sensex index in India decreased 447.77 or 2.81% to 15,514.79.

Commodities, Metals, and Currencies

Crude oil decreased $2.22 to close at $122.09 a barrel for a front month contract, natural gas increased 20 cents to $12.42 per mBtu, and gasoline futures decreased 16.67 cents to close at 318.58 cents per gallon.

Gold decreased $1.70 in New York trading to close at $883.80 per ounce, silver closed up 10 cents to $16.94 per ounce, and copper for front month delivery decreased 3.30 cents to $3.54 per pound.

Wheat futures decreased 2.50 cent in Chicago trading and closed at $7.53 per bushel. Sugar decreased 19 cent to $9.52 per pound. Soybean future closed down 29.50 cents to $13.89 a bushel.

Dollar edged higher and traded near record low against euro to $1.5439 and rose against yen to 105.18.

Yields on U.S. bonds increased to 3.97% with 10 years of maturities and decreased to 4.69% with 30-year of maturities.