JP Morgan Sparks a Sell-off; Peru Falls 4%

123jump.com Staff
12 Aug, 2008
New York City

JP Morgan Chase comments on the outlook in the second half and expectations of rising losses in its credit portfolio dragged financials and benchmark indexes fell. The U.S. trade deficit in June fell 4% to $56.8 billion. Exports rose on weaker dollar but imports in the month rose 1.8% to $221.2 billion of which petroleum products accounted $44.5 billion. The newly merged Thomson Reuters second quarter earnings fell to $172 million or 22 cents a share.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– Financial stocks weakened after cautious outlook from JP Morgan. Crude oil and gold declined. European and Latin American markets edged lower. Peru dropped 3.4%.[/R]

Global Markets Update

The U.S. trade deficit in June fell 4% to $56.8 billion after shrinking to $59.2 billion in May according to the Commerce Department. Imports in the month rose 1.8% to $221.2 billion of which crude oil and petroleum products accounted for $44.5 billion at a cost of $117.13 a barrel. The trade deficit with Asian countries persisted and gap with China rose to $21.4 billion from $21 billion in May. Fluor Corp and McDermott International fell.

U.S. market averages fell after financials fell. J P Morgan in the latest regulatory filing suggested that losses are likely to increase in the second half of the year. Analyst lowered their views and earnings on Goldman Sachs. Crude oil fell below $113 a barrel, lifting transportation and airlines stocks. AMR, the parent of American Airlines rose after positive comments from a broker.

North American Markets indexes

Dow Jones Industrial Average decreased 139.88 or 1.19% to a close of 11,642.47, S&P 500 Index closed down 15.73 or 1.21% to 1,289.59, and Nasdaq Composite Index decreased 9.34 or 0.38% to close at 2,430.61. In Toronto TSX Composite closed down 36.19 or 0.27% to 13,167.00.

Of the 30 stocks in Dow Jones Industrial Average 8 stocks gained, 22 declined and none was unchanged.

General Motors led gainers in the Dow Jones Industrial Average with a rise of 2.7% followed by increases in Caterpillar Inc of 1.3%, in Procter & Gamble of 1.27%, in Wal-Mart Stores of 1.10% and in Microsoft Corp of 0.72%.

JP Morgan led decliners in Dow Jones Industrial Average with a loss of 9.7% followed by losses in AIG of 6.6%, in Citigroup Inc of 6.4%, in Bank of America of 6.3%, in McDonalds Corp of 3.1% and in American Express of 3.06%.

Of the stocks in S&P 500 index, 128 increased, 371 declined and 1 were unchanged. Of the index stocks, 7 rose more than 3% and 109 fell more than 3%.

Titanium Metals led the gainers in the S&P 500 index with a rise of 5.6% followed by gains in Gap Inc of 4.5%, in Cabot oil & Gas of 3.7%, in Chesapeake Energy of 3.42%, in Monsanto Company of 3.34% and in Range Resources of 3.2%.

Constellation Energy led decliners in the S&P 500 index with a loss of 16.2% followed by losses in Zions Bancorp of 14.4%, in Wachovia Corp of 12.2%, in Lehman Brothers of 12.1%, in Lennar Corp of 11.70%, in JP Morgan Chase of 9.5% and in WaMu Inc of 9.28%.

South American Markets Indexes

Peru led decliners in the Latin American markets with a fall of 3.43% followed by decreases in Mexico of 1.14%, in Argentina and Colombia of 0.72%, in Brazil of 0.5% and in Chile of 0.34%. Venezuela closed higher 0.75%.

Europe Markets Review

In London FTSE 100 Index closed lower 7.30 or 0.13% to 5,534.80, in Paris CAC 40 Index decreased 20.01 or 0.44% to close at 4,518.48 and in Frankfurt DAX index declined 23.76 or 0.36% to close at 6,585.87. In Zurich trading SMI decreased 35.89 or 0.49% to close at 7,301.84.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 127.31 or 0.95% to 13,303.60, Hang Seng index in Hong Kong decreased 218.45 or 1.00% closed to 21,640.89. ASX 200 index in Australia increased 27.50 or 0.55% to close 5,053.60. The KL Composite index in Malaysia decreased 8.68 or 0.77% closed to 1,118.78.

The Kospi Index in South Korea increased 3.97 or 0.25% to close at 1,577.12 and JSE Index in Indonesia decreased 76.34 or 3.58% to 2,057.58. The Sensex index in India decreased 291.79 or 1.88% closed to 15,212.13.

Commodities, Metals, and Currencies

Crude oil decreased $1.18 to close at $113.27 a barrel for a front month contract, natural gas closed up 2 cents to $8.37 per mBtu and gasoline futures decreased 1.66 cents to close at 285.00 cents per gallon.

Gold decreased $4.30 in New York trading to close at $824.00 per ounce, silver closed up 2 cents to $14.64 per ounce and copper for the front month delivery decreased 5.40 cent to $3.23 per pound.

Wheat futures closed down 3.25 cents in Chicago trading and closed at $8.15 a bushel. Sugar increased 0.24 cent to 13.61 cents a pound. Soybean future closed up 18.00 cents to $12.96 a bushel.

Dollar edged higher and traded near record low against euro to $1.4921 and edged lower against yen to 119.31.

Yields on U.S. bonds decreased to 3.91% with 10 years of maturities and increased to 4.54% with 30-year of maturities.