Global Markets Fall, Loan Losses Worries

123jump.com Staff
22 Oct, 2008
New York City

Stocks around the world decline on the worries that international trade will shrink as global economies slowdown. Exports from China are likely to fall which will lower demand for raw materials. Banks drop in Euorpe on the worries that many leveraged buyout deals will unravel.

[R]10:45AM New York – Stocks around the world decline. Dollar gains against euro, pound and yen. Crude oil and gold prices decline.[/R]

Stocks, commodities and crude oil prices fell around the world as investors worry that global economic slowdown will lower international trade, demand for raw materials and earnings at domestic companies.

Japan, Hong Kong, and India plunged 5% or more in overnight trading.

Banks in Europe and in the U.S. trading dropped after Wachovia reported weak earnings. The banks in UK, Germany and France declined. Royal Bank of Scotland, Barclays, HSBC and Lloyds TSB dropped on the worries that loan losses from leveraged corporate buyouts are likely to rise.

The losses from leverage buyout deals are not haunting banks. Nearly $1.4 trillion of secured and unsecured leveraged loan market is likely to face a wave of default as the U.S. and European economies slowdown.

The dollar continues its ascent against major currencies around the world. The euro fell to $1.28 from $1.30, against pound to $1.63 from $1.67 and 99 yen from 101 yen. The sharp reversal in dollar value in the last five months is likely to affect U.S. exports for the rest of the year, just at the time when the U.S. economy is slowing down.

Crude oil prices fell 6% or $4.22 to $67.96 a barrel and gold declined 2.6% or $20.20 to $747.80.

Earnings Review

Apple Inc ((AAPL)) gained 13.2% or $12.12 to $103.61 after the iPhone and computer maker said fourth quarter sales rose 27% to $7.9 billion from $6.22 billion a year ago. Net income in the quarter rose 26% to $1.14 billion or $1.26 per diluted share compared to net income of $904 million or $1.01 per share, a year ago.

Air Products and Chemicals, Inc ((APD)) fell 8.5% or $4.88 to $56.88 after the provider of industrial gases and specialty materials reported fourth quarter sales rose 14% to $2.71 billion from $2.37 billion a year ago. Net income in the quarter fell 11% to $261.6 million or $1.21 per diluted share compared to net income of $292.8 million or $1.31 per share, a year ago.

Broadcom Corporation ((BRCM)) surged 8.7% or $1.20 to $15.00 after the communications chip maker said third quarter sales rose 37% to $1.3 billion from $950 million a year ago. Net income in the quarter rose 493% to $164.9 million or 31 cents per diluted share compared to net income of $27.8 million or 5 cents per share, a year ago.

The Boeing Company ((BA)) fell 5.1% or $2.51 to $43.85 after jet plane maker defense contractor reported third quarter revenues fell 7% to $15.3 billion from $16.5 billion a year ago. Net income in the quarter fell 38% to $695 million or 96 cents per diluted share compared to net income of $1.11 billion or $1.44 per share, a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 631.56 or 6.79% to 8,674.69, Hang Seng index in Hong Kong decreased 774.57 or 5.15% closed to 14,266.60. CSI 300 index in China lower 48.08 or 2.56% closed to 1,833.32. ASX 200 index in Australia decreased 146.40 or 3.40% to close 4,156.10. The KL Composite index in Malaysia lower 13.88 or 1.51% closed to 904.28.

The Kospi Index in South Korea decreased 61.51 or 5.14% to close at 1,134.59. SET index in Thailand closed lower 13.55 or 2.83% to 465.24, and JSE Index in Indonesia decreased 60.41 or 4.19% to 1,379.74. The Sensex index in India decreased 513.49 or 4.81% closed to 10,169.90.

Europe Markets Review

In London FTSE 100 Index traded lower 124.64 or 2.95% to 4,105.09, in Paris CAC 40 Index decreased 115.32 or 3.32% to 3,360.08 and in Frankfurt DAX index traded lower 170.26 or 3.56% to 4,614.15. In Zurich trading SMI decreased 196.37 or 3.17% to 5,989.11.