Citigroup Bailout, World Stocks Surge

123jump.com Staff
24 Nov, 2008
New York City

Stocks in New York and Europe surged on yet another bailout action by the U.S. The Fed, FDIC agreed to extended guarantee for Citigroup $306 billion loans and Treasury plans to inject $20 billion. Despite the size of the support from the U.S. the bank may not survive the current financial crisis.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– Stocks in U.S., Europe and South America surged after the U.S. agreed to inject $20 billion in the troubled Citibank and provide a guarantee for $306 billion loans.[/R]

Global Markets

U.S. stocks rallied on hopes and bailout plan for Citigroup and Obama economic stimulus proposal for $500 billion. The cost of the bailout has now surged above $2.3 trillion with the prospect of near term economic improvements. Though investors are focused the decline in economic activities the action by the government is only going to add to inflationary pressure in the distant future.

The Federal Reserve Bank, the U.S. Treasury and the Federal Deposit Insurance Corporation jointly announced yesterday that the government will guarantee Citigroup's troubled assets, loans and securities that are backed by residential and commercial real estate valued at $306 billion.

The U.S. bailout action lifted the sentiment in the financial sector and lifted JP Morgan Chase, Bank of America and other banks more than 20%.

Existing home sales in October fell at 3% annual rate from September and the median price for homes dropped 11% from a year ago to $181,800.

European markets surged on the Citigroup bailout news. London and Paris surged more than 10% and other markets in the region surged between 6% and 9%.

Markets in South America soared more than 5% on the hopes that the U.S. banking bailout will stem the rapidly deteriorating world economic outlook. Brazil surged 9.4% followed by Argentina with a rise of 8.8% and Mexico with 7%.

North American Markets

Dow Jones Industrial Average jumped 396.97 or 4.9% to a close of 8,443.39, S&P 500 Index surged 51.78 or 6.5% to 851.81, and Nasdaq Composite Index soared 87.67 or 6.3% to close at 1,472.05. In Toronto, TSX Composite Index gained 285.48 or 3.5% to 8,440.87.

Of the 30 stocks in Dow Jones Industrial Average 29 closed higher and 1 closed lower.

Citigroup Inc led gainers in the Dow with a surge of 57% followed by gains in Bank of America of 27%, in JP Morgan Chase of 21.4%, in General Motors of 17%, in American Express of 12% and Home Depot Inc of 11%.

Wal-Mart Stores was the lone decliner in the Dow with a loss o 0.3%.

Of the stocks in S&P 500 index, 465 increased, 34 decreased and one was unchanged. Of the index stocks, 402 rose more than 3%, 6 fell more than 3% and 181 surged above 10%.

Genworth Financial led the gainers in the S&P 500 index with a surge of 89% followed by gains in Citigroup Inc of 57%, in CB Richard Ellis of 45%, in Merrill Lynch of 38%, Kimco Realty of 34%, in Morgan Stanley of 33%, in CIT Group Inc of 31% and in Jones Apparel of 31%.

Campbell Soup led decliners in the S&P 500 index with a fall of 7% followed by losses in Copper Industries of 7.3%, in Prologis of 7.2%, in Time Warner Inc 4.9%, in General Dynamics of 3.4% and in Raytheon Company of 3.2%.

South American Markets Indexes

Brazil led gainers in the South American region with a rise of 9.4% followed by increases in Argentina of 8.8%, in Mexico of 7.0%, in Colombia of 3.2% , Peru of 2.6% and in Chile of 2.1%.

Venezuela was the lone decliner in the region with a loss of 0.7%.

Europe Markets Review

In London FTSE 100 Index closed higher 372.00 or 9.84% to 4,152.96, in Paris CAC 40 Index increased 290.85 or 10.10% to close at 3,172.11 and in Frankfurt DAX index higher 426.92 or 10.34% to close at 4,554.33. In Zurich trading SMI increased 322.38 or 6.27% to close at 5,466.40.

Asian Markets Review

Hang Seng index in Hong Kong decreased 201.26 or 1.59% closed to 12,457.94 CSI 300 index in China lower 83.09 or 4.33% closed to 1,837.64. ASX 200 index in Australia increased 8.60 or 0.25% to close 3,425.10. The KL Composite index in Malaysia higher 11.49 or 1.33% closed to 855.39. Markets of Japan were closed today.

The Kospi Index in South Korea decreased 33.59 or 3.35% to close at 970.14. SET index in Thailand closed lower 11.39 or 2.87% to 386.12 and JSE Index in Indonesia decreased 4.88 or 0.43% to 1,141.40. The Sensex index in India decreased 12.09 or 0.14% closed to 8,903.12.

Commodities, Metals, and Currencies

Crude oil increased $4.57 to close at $54.50 a barrel for a front month contract, natural gas increased 32 cents to $6.82 per mBtu and gasoline futures increased 7.80 cents to close at 114.25 cents per gallon.

Wheat futures closed up 38.75 cents in Chicago trading and closed at $5.56 a bushel. Sugar increased 0.44 cent to 11.72 cents a pound. Soybean future closed up 44 cents to $8.84 a bushel.

Gold increased $28.00 in New York trading to close at $824.40 per ounce, silver closed up 87 cents to $10.38 per ounce and copper for the front month delivery increased 9.25 cent to $1.67150 per pound.

Dollar edged lower against euro to $1.2936 and rose against yen to 97.02.

Yields on 10-year U.S. bonds dropped to 3.32% and with 30-year maturities decreased to 3.78%.