Early Optimism Fades, Senate Skepticism

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

Stocks in New York edged higher as lawmakers debate details of the $700 billion bailout plan. Dollar traded lower against euro and Japanese yen. Crude oil traded lower after surging to a record one-day gain. Nomura agrees to buy Lehman banking asset in Europe and Middle East.

[R]10:10AM New York – U.S. stocks edge higher as lawmakers struggle to agree on details for bailout.[/R]

U.S. Pressure Lawmakers

U.S. market averages edged higher as cautious investors hope for a quick action on bailout plan from lawmakers. Treasury secretary Paulson plan is increasingly facing questions from Republicans and Democrats as very details are still clear about the plan. The size of the bailout package will boost the U.S. debt to record level as cost of Iraq war and now the bank bailout will be added to the U.S. government debt.

Several lawmakers pointed out that Bush administration had asked for a swift approval during the Iraq war and the administration is using the same pressure tactics to ask for the record bailout plan without enough debate in both chambers of the Congress.

Fed Chairman Bernanke and Treasury Secretary Paulson in prepared remarks for the Senate Banking Committee exhorted Congress for quick action. However, lawmakers are increasingly questioning the effectiveness of the plan and size of the debt that the U.S. government will be saddled with. SEC Chairman Cox and FHFA director James Lockhart are also appearing before the committee.

Commodities Edge Lower

Dollar continued face headwinds for the second day in a row and declined against euro and Japanese yen. One euro fetched 1.477 dollar and yen rose to 105.54 against dollar.

Gold edged lower after surging for three days in a row and declined $8.20 to $$900.80 and silver dropped 3 cents to $13.42. Yield on 10-year U.S. bonds were at 3.78% and 30-year U.S. bonds were at 4.39%.

Nomura Buys Lehman Assets

Nomura Holdings Inc, the largest securities firm in Japan agreed to acquire Lehman banking unit in Europe and Middle East for ‘undisclosed’ amount. The Japanese bank agreed to acquire its Asian operation for $250 million will retain most its 3,000 staff. The Europe and Middle East unit employs 2,500 people and the Japanese bank is likely to absorb the entire staff.

Asian Markets Review

Hang Seng index in Hong Kong decreased 759.35 or 3.87% closed to 18,872.85. CSI 300 index in China lower 84.14 or 3.81% closed to 2,123.48. ASX 200 index in Australia decreased 97.00 or 1.93% to close 4,923.50. The KL Composite index in Malaysia lower 2.44 or 0.24% closed to 1,026.18. Market of Tokyo was closed today.

The Kospi Index in South Korea increased 21.03 or 1.44% to close at 1,481.37, SET index in Thailand closed lower 6.24 or 1.02% to 608.25 and JSE Index in Indonesia decreased 24.24 or 1.28% to 1,873.10. The Sensex index in India decreased 424.65 or 3.03% closed to 13,570.31.

Europe Markets Review

In London FTSE 100 Index traded lower 126.00 or 2.41% to 5,110.30, in Paris CAC 40 Index decreased 68.12 or 1.61% to 4,155.39 and in Frankfurt DAX index traded lower 57.36 or 0.94% to 6,050.39. In Zurich trading SMI decreased 97.26 or 1.41% to 6,790.13.