Global Plunge: US, UK, Brazil Down 3%

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

The popular indexes Dow, Nasdaq and S&P 500 dropped as investors worried that assset write downs at banks and financial brokers may increase sharply. Goldman Sachs estimated Citigroup to write down $9 billion this quarter and Sanford Bernstein projected a quarterly loss for Merrill Lynch. Stocks in consumer and financial sectors closed sharply lower. UK, Brazil, Spain, Holland, Sweden fell near 3% and all markets in South America and Europe closed lower on the weakness in New York.

5:00PM New York, 11:00PM Frankfurt, 7:00AM Sydney[R]– U.S. market indexes dropped 3% and dragged markets in Europe, Canada and South America lower. Brazil led the decliners in the region.[/R]

Global Markets Review

U.S. stocks accelerate their decline after analysts revised their estimates of asset write downs and losses at banks and brokerages. Goldman estimates current quarter asset write down at Citigroup of $8.9 billion and Sanford Bernstein projects a loss of 93 cents per share compared to 82 cents a share profit a year ago. General Motors led the decliners in indexes after a sell recommendation from Goldman Sachs.

European stocks fell sharply on rising expectations of inflation, higher estimates of losses at banks and continued decline in the U.S. markets. Indexes in Germany and France dropped nearly 2% as the U.S. indexes lost more than 3%. Hypo Real Estate and Dexia led the decliners in DAX 30 and CAC 40 indexes respectively with a loss of 8.4%. Gold surged on weak dollar.

UK stocks declined after the BOE Governor King projected higher inflation for the rest of the year. Rising fuel and food prices are stoking higher inflation expectations. UK and European markets fell between 1.5% and 2.5% after analysts revised estimate of asset write downs at the U.S. banks higher. Barclays and Royal Bank of Scotland dropped more than 3% and HSBC declined 2%.

The Bank of Japan policy committee member cautioned that rising prices for consumers may dampen spending and shift spending pattern. The comments suggested that low interest environment in Japan may be necessary to accommodate consumers. Tokyo Electric may report larger than estimated loss in the first half as it struggles to restart recently damaged nuclear power plant. J-Power plunged after shareholders rejected dividend increase proposal from an activist shareholder TCI.

Regulators in China urge companies to improve their corporate governance and abuse of company capital by majority shareholders. Stocks in Shanghai and Hong Kong fell as inflation fear persist on rising energy costs. Crude oil price fell in the region. Foxconn fell 5% and Li & Fung dropped 7% on brokerage downgrades. Hong Kong companies are expected to cut production in China located factories on rising fuel and labor costs. China Development Bank takes a stake in UK based Barclays.

North American Markets indexes

Dow Jones Industrial Average plunged 358.41 to a close of 11,453.42, S&P 500 closed down 38.82 or 2.94% to 1,283.15, and Nasdaq Composite Index decreased 79.89 or 3.33% to close at 2,321.37. In Toronto TSX Composite closed down 149.00 or 1.03% to 14,292.14.

Of the 30 stocks in Dow Jones Industrial Average none gained, 30 declined and none closed unchanged. Of the index stocks, fifteen fell 3% or more.

General Motors led the decliners Dow Jones index with a loss of 10.8% followed by losses in Bank of America of 6.7%, in Citigroup of 6.2%, in AIG of 5.5%, in General Electric of 5.2%, in American Express of 5%. United Technologies and Intel dropped 5%.

Of the stocks in S&P 500 index, 24 increased, 478 declined, and none were unchanged. Of the index stocks 3 increased more than 3% and 254 declined more than 3%.

MGIC Investment Corp led the decliners with a fall of 13% followed by losses in CIT Group of 12%, in Goodyear Tire of 11%, in General Motors of 10.8%, in MBIA Inc of 10.6%, in Nike of 9.8%, in Terex Corp of 9.4%. WaMu, Lennar and Centex dropped more than 8%.

Bed Bath & Beyond led the gainers in S&P 500 index with a rise of 4.3% followed by increases in Newmont Mining of 3.4%, in Sprint Nextel of 3.4%, in Autozone of 2.55% and in Weatherford International of 2.2%.

European Markets Indexes

In London trading FTSE 100 fell 2.61% or 147.9 at 5,518.20. The CAC 40 retreated 1.81% to 4,454.33. In Germany the DAX 30-index fell 123.92 points or 1.87% to 6,493.86. Shares in Switzerland fell as the Swiss Market index dropped 113.70 points or 1.61% to 6,967.67.

Of the 102 FTSE 100 stocks 4 gained, 97 declined, and 1 was unchanged. Lonmin Plc led advancers in the index shares with a rise of 3% followed by Cairn Energy gaining 1.55%.

European Gainers and losers

Arcelormittal led the gainers in the CAC 40 index stocks with a rise of 1.13% to 64.47 euros followed by gains in Total of 0.32% to 52.48 euros, in Sanofi- Aventis of 0.21% to 42.83 euros, in Vallourec of 0.15% to 208.30 euros and in Pernod Ricard of 0.15% to 65.72 euros.

Dexia led the decliners in the CAC 40 index with a loss of 8.35% to 10.76 euros followed by losses in Carrrefour of 7.82% to 38.30 euros, in Michelin of 6.33% to 44.96 euros, in PPR of 5.28% to 72.25 euros and in Renault of 5.08% to 53.25 euros.

Among the DAX 30 index shares, ThyssenKrupp led the two gainers with a rise of 0.53% to 40.08 euros followed by Fresenius Medical Care which climbed 0.06% to 35.26 euros.

Hypo Real Estate Holdings led the decliners in the DAX 30 index with a fall of 8.40% to 18.76 euros followed by losses in Deutsche Borse of 5.99% to 74.05 euros, in Infineon Technologies of 4.57% to 5.85 euros, in Continental AG of 4.52% to 63.78 euros and in Henkel KGaA of 4.49% to 25.71 euros.

South American Markets Indexes

Brazil led the decliners in the Latin American markets with a fall of 2.9% followed by decreases in Argentina of 0.93%, in Chile of 1.19%, in Colombia of 1.4%, in Peru of 1.1%, in Mexico of 1.2% and in Argentina of 0.9%.

Asian markets

In Tokyo Nikkei 225 Index closed lower 19.64 or 0.14% to 13,829.92, in Hong Kong Hang Seng index increased 179.14 or 0.80% closed to 22,635.16. In Australia ASX 200 index lower 52.20 or 0.99% to close 5,237.80. In Malaysia KL Composite index increased 8.83 or 0.74% closed to 1,209.11.

In South Korea Kospi Index increased 6.95 or 0.41% to close at 1,717.79, in Thailand SET index closed higher 14.67 or 1.92% to 778.42 and Indonesia JSE Index edged decreased 24.02 or 1.02% to 2,341.36. Sensex index in India increased 113.49 or 0.80% to 14,220.07.

Commodities, Metals, and Currencies

Crude oil increased $5.24 to close at $139.79 a barrel for a front month contract, natural gas increased 38 cents to $13.24 per mBtu, and gasoline futures increased 11.67 cents to close at 351.08 cents per gallon.

Gold increased $32.80 in New York trading to close at $915.10 per ounce, silver closed up 61.30 cents to $17.20 per ounce, and copper for front month delivery increased 5.20 cent to $3.82 per pound.

Wheat futures increased 22.50 cent in Chicago trading and closed at $9.420 per bushel. Sugar increased 30 cent to $12.95 per pound. Soybean future closed up 36.00 cents to $15.61 a bushel.

Dollar edged lower and traded near record low against euro to $1.5758 and fell against yen to 106.70.

Yields on U.S. bonds decreased to 4.04% with 10 years of maturities and decreased to 4.61% with 30-year of maturities.