Regional Banks Drop; InBev and Santander Deals

123jump.com Staff
14 Jul, 2008
New York City

The rescue plan proposed for two troubled lenders by the U.S. Treasury and Fed underwhelmed investors. The bail out plan is expected to excude shareholders. Fearful investors sold regional and large bank stocks. Of the S&P 500 index stocks, top fifteen decliners were banks with a los between 36% and 11%. Citigroup, AIG, Merrill Lynch and Wachovia were among the leading decliners. Washington Mutual, the worst decliner in the S&P 500 index said after the close it has $40 billion liquidity.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– Investors were underwhelmed by the Fed and U.S. Treasury plan to bail out two mortgage lenders Fannie and Freddie. Anheuser-Busch agreed to $52 billion merger and Banco Santander acquired Alliance Leicester for 1.26 billion pounds.[/R]

Global Markets

U.S. continued to slide as investors fear more losses at troubled banks. On Sunday U.S. Treasury Secretary asked authority from the U.S. Congress to take stake in the two troubled mortgage agencies Fannie Mae and Freddie Mac. Investors viewed that and the increased availability of the loans from the Fed and proposed plan from the Treasury as nothing but a bailout that will exclude shareholders of Fannie and Freddie.

Regional banks fell sharply. Of the stocks in S&P 500 index, 15 worst performing stocks were regional banks with a loss between 36% and 10%. Washington Mutual led the decliners in the index with a loss of 36%.

Anheuser-Busch Company agreed to a buyout offer from InBev NV of $70 per share or $52 billion. The merged beverage company will have the largest revenue among all beer companies with a market share of 50% in the U.S.

Banco Santander, the largest bank in the euro zone area agreed to acquire troubled UK lender Alliance Leicester for 1.26 billion pounds or for 317 pence per share.

Asian markets are likely to open sharply lower in few hours after weak closing in the U.S. today. European markets closed higher on the proposed plan from the U.S. administration but may open lower tomorrow. Banks and retailers are expected to fall.

North American Markets indexes

Dow Jones Industrial Average decreased 45.35 or 0.41% to a close of 11,055.19, S&P 500 closed down 11.20 or 0.90% to 1,228.29, and Nasdaq Composite Index decreased 26.21 or 1.17% to close at 2,212.08. In Toronto TSX Composite closed up 29.18 or 0.21% to 13,738.28.

Of the 30 stocks in Dow Jones Industrial Average 11 stocks gained and 19 declined.

Bank of America led the decliners in the Dow Jones Index with a fall of 7.1% followed by decreases in Citigroup of 6.1%, in General Motors of 5.8%, in American Express of 4.3%, in JP Morgan Chase of 4.2% and in AIG of 2.4%.

McDonalds Corp led the gainers in the Dow Jones Index with a rise of 1.5% followed by increases in Coca-Cola Company of 1.2%, in Alcoa Inc of 1.13%, in Procter & Gamble of 0.74% and in 3M Company of 0.54%.

Of the stocks in S&P 500 index, 157 increased, 339 declined and 4 were unchanged. Of the index stocks 14 stocks rose more than 3% and 85 fell more than 3%.

WaMu Inc led the decliners in the S&P 500 index with a loss of 36% followed by declines in First Horizon NA of 25.2%, in Zions Bancorp of 22.6%, in National City Corp of 18.1%, in Regions Financial of 16.5%, in M&T Bank Corp of 15.9% and in Huntington Banc of 15.1%

Allegheny Technology led the gainers in the S&P 500 index with a rise of 9.7% followed by gains in National Oilwell Varco of 5.4%, in Pulte Homes Inc of 4.6%, in Macy’s of 4.5%, in Enso International of 4.1% and in IAC/Interactive of 4.01%.

South American Markets Indexes

Peru led the gainers in the Latin American markets with a rise of 1.95% followed by increases in Brazil of 1.02%, in Venezuela of 0.97%, in Argentina of 0.81% and in Chile of 0.10%.

Colombia decline 0.5% and Mexico fell 0.35%.

European Markets Indexes

In London FTSE 100 Index closed higher 38.80 or 0.74% to 5,300.40, in Paris CAC 40 Index increased 41.89 or 1.02% to close at 4,142.53 and in Frankfurt DAX index higher 46.95 or 0.76% to close at 6,200.25. In Zurich trading SMI increased 36.37 or 0.55% to close at 6,675.26.

Asian markets

The Nikkei 225 Index in Tokyo closed lower 29.53 or 0.23% to 13,010.16, Hang Seng index in Hong Kong decreased 170.09 or 0.77% closed to 22,014.46. ASX 200 index in Australia decreased 58.90 or 1.18% to close 4,921.00. The KL Composite index in Malaysia decreased 6.39 or 0.56% closed to 1,144.00.

The Kospi Index in South Korea decreased 8.89 or 0.57% to close at 1,558.62, SET index in Thailand closed lower 13.23 or 1.81% to 717.06 and JSE Index in Indonesia decreased 17.31 or 0.76% to 2,259.54. The Sensex index in India decreased 139.34 or 1.03% to 13,330.51.

Commodities, Metals, and Currencies

Crude oil increased 8 cents to close at $145.17 a barrel for a front month contract, natural gas closed up 10 cents to $12.00 per mBtu and gasoline futures increased 0.56 cents to close at 355.76 cents per gallon.

Gold increased $13.10 in New York trading to close at $973.70 per ounce, silver closed up 43 cents to $19.25 per ounce, and copper for front month delivery increased 1.20 cent to $3.75 per pound.

Wheat futures decreased 12.750 cent in Chicago trading and closed at $8.18 per bushel. Sugar decreased 40 cent to $13.59 per pound. Soybean future closed down 37.00 cents to $15.59 a bushel.

Dollar edged lower and traded near record low against euro to $1.5910 and fell against yen to 106.11.

Yields on U.S. bonds decreased to 3.86% with 10 years of maturities and decreased to 4.45% with 30-year of maturities.