Banks Lift U.S. Indexes; Ford Seeks $9 Billion

123jump.com Staff
02 Dec, 2008
New York City

U.S. stocks rallied on the hopes that the Fed will continue to lower rates after Fed Chairman Bernanke did not rule out zero rate possibilities. The Fed is running out of options and will be forced to look for alternative ways to provide liquidity. Ford is seeking $9 billion from the Congress.

[R]11:05 AM New York – U.S. Stocks rally on rate cut optimism. Goldman Sachs falls on expectations of sharply higher quarterly losses.[/R]

Central banks around the world were in focus today. Australia lowered its key lending rate by a full percentage point to 4.25% and UK this week is likely to cut its rate. The Fed is expected to lower rates to 0.5% at a meeting on December 16.

Stocks in the U.S. rally this morning after the Fed Chairman Bernanke showed willingness to lower rates to zero and look for alternative ways to stimulate the economy. The Fed has either provides or guaranteed $2 trillion of loans in the last one year and more stimulus is likely from the U.S. Congress and from the Fed.

Banks rallied in the morning trading on the hopes of another rate cut in two weeks. Citigroup led the gainers with a surge of 9% or 56 cents to $7.01 followed by gains in Bank of America with a rise of 7% or 87 cents to $13.72 and in Merrill Lynch of 7.9% or 80 cents to $10.93.

Goldman Sachs ((GS)) dropped 1.4% or 92 cents to $64.79 after the Wall Street Journal reported that the company is likely to lose $2 billion or $5 a share.

After prodding from the U.S. Congress Alan Mulally, chief executive of Ford Motor Corp reluctantly agreed to work for $1 annual salary if the troubled auto maker sought emergency funding from the U.S. Mulally in the previous testimony rejected the idea of lower executive salary and said that it is only “symbolic.” Ford offered a business plan to the Congress and sought $9 billion in debt financing and said that it does not see liquidity crisis in 2009 unless one of its competitor files for bankruptcy filing.

Ford Motor has consistently lagged its foreign rivals in product quality and costs and executives at the company have lived on high salaries. Unionized workers at the company earn more than $70 per hour when most people in America earn less than $20 per hour.

Europe Markets Review

In London FTSE 100 Index traded higher 2.20 or 0.05% to 4,067.69, in Paris CAC 40 Index increased 17.13 or 0.56% to 3,097.56 and in Frankfurt DAX index traded higher 68.04 or 1.55% to 4,462.83. In Zurich trading SMI decreased 11.64 or 0.21% to 5,515.94.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 533.53 or 6.35% to 7,863.69, Hang Seng index in Hong Kong decreased 702.99 or 4.98% closed to 13,405.85 CSI 300 index in China higher 4.43 or 0.24% closed to 1,868.63. ASX 200 index in Australia decreased 153.00 or 4.16% to close 3,528.20. The KL Composite index in Malaysia lower 2.68 or 0.32% closed to 845.75.

The Kospi Index in South Korea decreased 35.42 or 3.35% to close at 1,023.20. SET index in Thailand closed lower 3.60 or 0.92% to 387.32 and JSE Index in Indonesia decreased 31.77 or 2.60% to 1,191.36. The Sensex index in India decreased 100.63 or 1.14% closed to 8,739.24.