U.S. Indexes Drop 14%

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

Markets around the world decline in the first half of this year on rising inflation and U.S. housing market led global credit market crisis. There appears to be no end to the weakness in the credit market and lenders in U.S tighten loan standards and issue fewer loans. Dow and S&P 500 indexes fell 14% and Nasdaq declined 13.6% in the first half. Indexes in Shanghai lost 48%, in India dropped 34% and in Japan fell 11%. UK index dropped 14% and indexes in Germany, France and Spain fell.

4:30PM New York, 10:30AM Frankfurt, 6:30AM Sydney[R]– Indexes around the world drop in the double digits for the year as the U.S. housing market led credit market crisis and rising inflation hobble investors.[/R]

U.S. stocks rebounded after crude oil futures fell from the intra-day record high of $143 a barrel. Corn futures fell 4%, the daily limit after the latest planting report from the USDA. The report showed 2% increase to 87.3 million acres of corn planting from its previous estimate in March. H&R Block rose after it reported profit in the latest quarter. MBIA and MGIC Investment led the decliners in the S&P 500 index. Lehman Brothers dropped 10% on speculation that the broker may be sold at lower price. S&P 500 index and Dow Jones Index lost 14.4% in the first half of 2008 and Nasdaq dropped 13.6% in the period.

Stocks in India closed lower on continued rift within the ruling coalition on the nuclear deal with the U.S. The ruling party coalition may be dissolved if the Congress Party signs a deal without the approval of communist parties members. The Sensex index fell 2.5% and is down 38% from its peak in January and 34% in the first half. Airlines stocks fell sharply on higher jet fuel prices from tomorrow. Banks closed lower after State Bank of India lowered its estimates.

UK consumer confidence fell to a record low on rising fuel and food prices and tighter credit conditions. Another survey of banks showed that banks estimate more than six months before credit markets will stabilize. The BoE reported that mortgage loans in May fell to 42,000 from 58,000 in April. A spike in crude oil price in London lifted energy stocks.

Japan stocks declined for the eighth day in a row as global credit market worries and rising crude oil prices affect trading sentiment. Moody’s raised its rating on sovereign debt of Japan and cited restrained spending by the government. Japan also eliminated taxes on off-shore funds to attract foreign asset managers. Steel stocks in Japan rose higher after Posco of Korea and ArcelorMittal of Europe raised stakes in Macarthur Coal of Australia. Nikkei 225 index dropped 11% in the first half of this year.

Stocks in Hong Kong fell 21% in the first half as credit market jitters dragged stocks lower. Rising energy and food prices dragged stocks in Shanghai lower in the first half as well. Stocks in Shanghai are down nearly 50% from the peak in October. Tanshan Steel and Handan Steel merge to form Hebei Steel, the largest Chinese steel company with production of 50 million tons in 2009. Shanghai CSI 300 index dropped 23% in June and lost 48% for the year.

The battle for Australian coal resources heats up after Posco and ArcelorMittal acquire stakes in the company. ArcelorMittal raised its stake to 20% and Posco took a stake of 10%. Steel companies from China, Korea and Europe are eying for Australian mineral resources as coal, iron ore and other raw materials rise in prices. Australian dollar surges. ANZ declined to take a majority stake in prime broker Chimera after initial review. Babcock agrees to pay higher interest and delays debt repayment.

North American Markets indexes

Dow Jones Industrial Average increased 3.50 to a close of 11,350.01, S&P 500 closed up 1.62 or 0.13% to 1,280.00, and Nasdaq Composite Index decreased 22.65 or 0.98% to close at 2,292.98. In Toronto TSX Composite closed up 100.49 or 0.34% to 14,431.61.

Of the 30 stocks in Dow Jones Industrial Average 20 gained and 10 declined.

AIG led the decliners in the Dow Jones with a loss of 3.8% followed by losses in Citigroup of 2.5%, in Bank of America of 2.2%, in Home Depot of 1.6% and in JP Morgan Chase of 1.2%.

Verizon led the gainers in the Dow Jones Industrial Average with a rise of 3.4% followed by increase in AT&T of 2.7%, in Merck of 2.5%, in Exxon Mobil of 1.8% and in General Electric of 1.7%.

Of the stocks in S&P 500 index, 293 increased, 200 declined, and 7 were unchanged. Of the index stocks 44 increased more than 3% and 27 declined more than 3%.

CIT Group led the decliners in the S&P 500 index with a loss of 16% followed by losses in MGIC Investment Corp of 15%, in XL Capital Ltd of 13%, in Lehman Brothers of 10% and in Freddie Mac of 8.6%.

Sunoco led the gainers in the S&P 500 with a rise of 9.2%, in Sprint Nextel of 6.2%, in Teradyne Inc of 5%, in WaMu Inc of 4.9%, Forest Labs Inc of 4.9% and in Peabody Energy of 4.88%.

South American Markets Indexes

Brazil led the gainers in the Latin American markets with a rise of 1.11% followed by increases in Argentina of 0.34%, in Venezuela of 0.30%, in Colombia of 0.23% , in Chile of 0.14%, and in Mexico of 0.08%. Peru the lone decliner in the region, dropped 0.29%.

European Markets Indexes

The CAC 40 rose 37.43 or 0.85% to 4,398.58. In Germany the DAX 30 index fell 3.59 or 0.06% to 6,418.32. Swiss Market index rose 96.97 or 1.41% to 6,958.51. The FTSE 100 increased 96.00 or 1.74% to 5,625.90.

Asian markets

In Tokyo Nikkei 225 Index closed lower 62.98 or 0.46% to 13,481.38, in Hong Kong Hang Seng index increased 59.66 or 0.27% closed to 22,102.01. In Australia ASX 200 index lower 21.70 or 0.41% to close 5,215.30. In Malaysia KL Composite index decreased 3.97 or 0.33% closed to 1,186.57.

In South Korea Kospi Index decreased 9.53 or 0.57% to close at 1,674.92, in Thailand SET index closed lower 7.14 or 0.92% to 768.59 and Indonesia JSE Index edged increased 16.99 or 0.73% to 2,349.10. Sensex index in India decreased 340.62 or 2.47% to 13,461.60.

Commodities, Metals, and Currencies

Crude oil increased $0.13 to close at $140.34 a barrel for a front month contract, natural gas increased 20 cents to $13.40 per mBtu, and gasoline futures increased 0.03 cents to close at 350.15 cents per gallon.

Gold decreased $3.00 in New York trading to close at $928.30 per ounce, silver closed down 20.00 cents to $17.51 per ounce, and copper for front month delivery increased 0.450 cent to $3.88 per pound.

Wheat futures decreased 53.250 cent in Chicago trading and closed at $8.58 per bushel. Sugar increased 40 cent to $13.14 per pound. Soybean future closed up 14.50 cents to $15.74 a bushel.

Dollar edged higher and traded near record low against euro to $1.5744 and fell against yen to 106.22.

Yields on U.S. bonds were unchanged to 3.97% with 10 years of maturities and fell to 4.52% with 30-year of maturities.