IMF Estimate Drags Indexes Down 2%

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

Another day another sell-off in financial stocks. IMF report warned that the U.S. housing market has yet to reach a bottom and estimated nearly $1 trillion in losses for global banks. The report put investors on the defensive and stocks in financial, home builders and banking sectors fell. Merrill Lynch dropped to a new low in the last ten years. Toyota lowered its outlook for annual unit sales and Honda lowered its earnings estimate for the quarter. UK home prices fell in June.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– U.S. stock benchmarks fell 2% as financials, home builders and insurance companies fell. European markets declined. Toyota lowered its global sales outlook and Honda lowered its earnings outlook.[/R]

Global Markets Update

U.S. financial stocks continued to decline after a report from the IMF suggested that housing market has may fall further and inflict more losses to the battered banks. Banks, home builders and financial brokers fell. Merrill Lynch dropped to a new low and Citigroup, Bank of America, AIG and Wachovia Bank declined. Fannie Mae and Freddie Mac fell as investors were skeptical of the recently passed housing bill. Amgen rose on positive research results for a bone loss experimental drug and after the close reported earnings of $1.14 per share beating the expectations of $1.03 a share.

Stocks in London fell after weak housing market data and lack of interest in financial stocks. Two separate surveys showed a decline in home prices in June and indicated further declines are likely as credit markets remain tight. Financial stocks fell after Australia and New Zealand Banking Group tripled its loan delinquencies rate. Royal Bank of Scotland sold its stake in a joint venture with Tesco to the retailer.

Stocks in Japan edged higher on a rise in commodities related stocks. Yahoo Japan reported 18% rise in earnings and gained 4% in trading. Honda lowered its earnings outlook on higher raw materials costs and Toyota Motor Corp lowered its annual sales outlook by 3.6% to 9.85 million units and production estimate by 4.5% to 9.5 million vehicles. Tokyo Electric Power estimated annual loss of 280 billion yen and increase rates by 12%.

Stocks in Hong Kong trading fell but in Shanghai rose. Banks and telecom services companies declined in Hong Kong led by a decline in HSBC and China Mobile. Shipping companies, China Cosco, Pacific Basin and China Shipping Container Lines fell on weak global outlook. China trade with Asean member nations increased 27% in the first five months of the year.

North American Markets indexes

Dow Jones Industrial Average decreased 239.61 or 2.11% to a close of 11,131.08, S&P 500 closed down 23.39 or 1.86% to 1,234.37, and Nasdaq Composite Index decreased 46.31 or 2.00% to close at 2,264.22. In Toronto TSX Composite closed down 74.85 or 0.56% to 13,303.96.

Of the 30 stocks in Dow Jones Industrial Average 1 stocks gained, 29 declined and none was unchanged.

AIG led the decliners in the Dow Jones Index with a fall of 11.3% followed by decreases in General Motors of 7.6%, in Citigroup of 7.5%, in Bank of America of 5.14%, in JP Morgan Chase of 4.7% and in General Electric of 3.55%. Alcoa was the lone gainer in the Dow Jones Index with a rise of 2.67%.

Of the stocks in S&P 500 index, 69 increased, 428 declined and 3 were unchanged. Of the index stocks 8 stocks rose more than 3% and 113 fell more than 3%.

MBIA led the decliners in the S&P 500 index with a loss of 12.3% followed by declines in AIG of 12.04%, in Merrill Lynch of 11.6%, in Fannie Mae of 10.7%, in Lehman Brothers of 10.74%, in Legg Mason of 10.02% and in MGIC Investment Corp of 8.3%

Amgen led the gainers in the S&P 500 index with a rise of 12.2% followed by gains in Sunoco Inc of 6.11%, in Kraft Foods Inc of 4.9%, in Convergys Corp of 4.6%, in Lorillard Inc of 4.14% and in Bank of AK Steel Holdings of 3.3%.

South American Markets Indexes

Mexico led decliners in the Latin American markets with a fall of 1.30% followed by decreases in Chile of 0.96%, in Venezuela of 0.91% and in Brazil of 0.6%. Argentina led the gainers in the region with a rise of 0.65% and Peru gained 0.58%.

Europe Markets Review

In London FTSE 100 Index closed lower 40.00 or 0.75% to 5,312.60, in Paris CAC 40 Index decreased 52.73 or 1.20% to close at 4,324.45 and in Frankfurt DAX index lower 85.56 or 1.33% to close at 6,351.15. In Zurich trading SMI decreased 46.10 or 0.66% to close at 6,968.93.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 19.02 or 0.14% to 13,353.78, Hang Seng index in Hong Kong decreased 53.50 or 0.24% closed to 22,687.21. ASX 200 index in Australia decreased 48.40 or 0.97% to close 4,922.10. The KL Composite index in Malaysia increased 14.34 or 1.26% closed to 1,156.09.

The Kospi Index in South Korea increased 0.36 or 0.02% to close at 1,598.29, SET index in Thailand closed higher 0.06 or 0.01% to 685.53 and JSE Index in Indonesia increased 30.33 or 1.35% to 2,275.68. The Sensex index in India increased 74.17 or 0.52% to 14,349.11.

Commodities, Metals, and Currencies

Crude oil increased $1.40 to close at $124.66 a barrel for a front month contract, natural gas closed up 4 cents to $9.12 per mBtu and gasoline futures increased 3.72 cents to close at 306.95 cents per gallon.

Gold increased $0.90 in New York trading to close at $937.80 per ounce, silver closed up 17 cents to $17.55 per ounce and copper for front month delivery increased 0.70 cent to $3.61 per pound.

Wheat futures decreased 7.75 cent in Chicago trading and closed at $8.24 per bushel. Sugar decreased 0.12 cent to 12.01 cents per pound. Soybean future closed up 9.50 cents to $13.96 a bushel.

Dollar edged higher and traded near record low against euro to $1.5740 and rose against yen to 107.45.

Yields on U.S. bonds decreased to 4.01% with 10 years of maturities and decreased to 4.61% with 30-year of maturities.