Banks in UK, Germany Drop

123jump.com Staff
16 Sep, 2008
New York City

European markets closed lower after banks in the region dropped and ECB in coordination with Swiss National Bank and the U.S. Fed added liquidity to the system. Barclays, after the close may have reached an accord to buy Lehman capital markets operations in the U.S. AIG downgrade dragged UBS down 17% and HBOS by 21%. Xstrata dropped 7% after copper and other metals fell more than 3%. Energy companies in the region dropped after crude oil futures fell 3%.

5:00PM New York, 11:00PM Frankfurt, 7:00AM Sydney[R]– The Federal Reserve left its key rate unchanged at 2%. AIG dropped 75% after ratings downgrades but closed down only 21% on optimism of loan rescue package from the Fed. Bank stocks around the world plunged as Asian and Latin American markets decline.[/R]

Global Markets

European markets closed lower after banks in the region dropped and ECB in coordination with Swiss National Bank and the U.S. Fed added liquidity to the system. Barclays, after the close may have reached an accord to buy Lehman capital markets operations in the U.S. AIG downgrade dragged UBS down 17% and HBOS by 21%. Xstrata dropped 7% after copper and other metals fell more than 3%. Energy companies in the region dropped after crude oil futures fell 3%.

Porsche increased its stake in Volkswagen to 35.1% after it added 4.9% stake and hopes to acquire a majority stake in the automobile company. Volkswagen gained 9.4% to 226.50 euros after the filings with the German regulator showed that Porsche acquired 14.4 million shares.

U.S. stocks closed higher after the Federal Reserve left its key rate unchanged at 2% and the U.S. Treasury appears to be preparing an emergency loan plan for AIG. In a wild trading, AIG dropped as much as 75% to $1.25 in the morning trading after several rating agencies lowered the insurer rating for counterparty risk by several notches. The stock recovered to close at $3.75 on the hopes that the U.S. emergency loan package will tide the company over from the current liquidity crisis.

Banks around the world fell as investors sell stocks in Asia and Europe. The prospect of AIG bankruptcy filing swirled the borderless global markets and banks in Japan, China, Hong Kong, Korea, India and UK dropped. Japanese and Korean banks plunged as several banks in the Japan declared a total of $1.6 billion in loan exposure to Lehman Brothers.

Stocks in Asia and in Japan fell as banks plunged after Lehman Brothers filed bankruptcy protection, Merrill Lynch was sold to Bank of America and AIG faced liquidity crunch. The U.S. financial crisis continues to deepen as more companies are ensnared in the downdraft. AIG, the largest insurance company may need to raise $75 billion in emergency funding, which increasingly looks unlikely. Seven banks in Japan have combined exposure of $1.6 billion to the failed investment banker Lehman Brothers.

Stocks in Australia dropped as banks around the world declined after Lehman Brothers filed for bankruptcy protection and AIG faced liquidity issues and sought $75 billion in emergency funding. The news of two large U.S. financial institution meltdown rattled investors around the globe. Lehman Brothers owes A$400 million to Australian banks. Babcock & Brown led decliners in the index stocks with a plunge of 48%. Commodity stocks also slipped as crude oil prices declined 5.4% in the region.

North American Markets

Dow Jones Industrial Average increased 141.51 or 1.30% to a close of 11,059.02, S&P 500 Index closed up 20.90 or 1.75% to 1,213.60, and Nasdaq Composite Index increased 27.99 or 1.28% to close at 2,207.90. In Toronto TSX Composite closed down 27.04 or 0.22% to 12,226.99.

Of the 30 stocks in Dow Jones Industrial Average 18 stocks gained, 12 declined and none was unchanged.

Bank of America led gainer in the Dow Jones Industrial Average with a rise of 11.30% followed by increase in JP Morgan Chase of 10.11%, in Hewlett Packard of 6.8%, in Exxon Mobil Corp of 4.4% and in du Pont of 3.4%.

AIG led decliners in Dow Jones Industrial Average with a fall of 21.22% followed by losses in General Motors of 5.24%, in Home Depot of 3.2%, in Microsoft Corp of 3.1% and in Alcoa Inc of 1.6%.

Of the stocks in S&P 500 index, 345 increased, 154 declined and 1 was unchanged. Of the index stocks, 129 rose more than 3% and 33 fell more than 3%.

Lehman Brothers led the gainers in the S&P 500 index with a rise of 42.86% followed by gains in Merrill Lynch of 30%, in Simon Property of 16.6%, in Wamu Inc 16%, in Prologis of 14.21% and in Chubb Corp of 13.46%.

Constellation Energy led decliners in the S&P 500 index with a plunge of 35.90% followed by losses in AIG of 21.22%, in Dell Inc of 11.2%, in Morgan Stanley of 10.84%, in Micron Technology of 7.8%, in Monster Worldwide of 7.7% and in Boston Scientific of 7.4%.

South American Markets Indexes

Mexico led decliners in the region with a fall of 3.79% followed by decreases in Colombia of 3.78%, in Peru of 3.35%, in Chile of 1.8% and in Venezuela of 0.16%.

Brazil led gainers in the region with a rise of 1.7% followed by increase in Argentina of 0.6%.

Europe Markets Review

In London FTSE 100 Index closed lower 178.60 or 3.43% to 5,025.60, in Paris CAC 40 Index decreased 81.57 or 1.96% to close at 4,087.40 and in Frankfurt DAX index lower 98.99 or 1.63% to close at 5,965.17. In Zurich trading SMI decreased 206.18 or 2.97% to close at 6,732.93.

Russian Trading System Index plunged 12% or 146.48 to 1,131.12 before the market was halted after market circuit breakers suspended trading in the final hour of trading. Energy and mining stocks fell between 15% and 18% and Vimpel Communication dropped 10%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 605.04 or 4.95% to 11,609.72, Hang Seng index in Hong Kong decreased 1052.29 or 5.44% closed to 18,300.61. ASX 200 index in Australia decreased 66.90 or 1.39% to close 4,750.80. The KL Composite index in Malaysia decreased 19.26 or 1.87% closed to 1,012.37.

The Kospi Index in South Korea decreased 90.17 or 6.10% to close at 1,387.75, SET index in Thailand closed lower 17.83 or 2.78% to 624.56 and JSE Index in Indonesia increased 16.38 or 0.95% to 1,735.64. The Sensex index in India decreased 12.47 or 0.09% closed to 13,518.80.

Commodities, Metals, and Currencies

Crude oil decreased $2.81 to close at $92.90 a barrel for a front month contract, natural gas decreased 10 cent to $7.28 per mBtu and gasoline futures decreased 12.14 cents to close at 244.00 cents per gallon.

Gold decreased $5.20 in New York trading to close at $781.80 per ounce, silver closed down $0.65 cents to $10.48 per ounce and copper for the front month delivery decreased 5.40 cent to $3.08 per pound.

Wheat futures closed down 37 cents in Chicago trading and closed at $6.90 a bushel. Sugar decreased 0.18 cent to 13.70 cents a pound. Soybean future closed down 55.00 cents to $11.24 a bushel.

Dollar edged higher against euro to $1.4156 and edged higher against yen to 106.21.

Yields on 10-year U.S. bonds increased to 3.51% and increased to 4.13% with 30-year of maturities.