U.S. Stocks Reversal; Japan Lowers Rates

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

U.S. stocks staged a reversal of nearly 2% despite President offering emergency loans to GM and Chrysler. Bank of Japan lowered its key rate to 0.1% and expanded its role in purchasing government and corporate debt. HSBC Holdings dropped after S&P downgraded debt ratings of financial institutions.

4:30PM New York, 10:30PM Frankfurt, 7:30AM Sydney[R]– U.S. stocks staged a reversal of nearly 2% despite President offering emergency loans to GM and Chrysler. Bank of Japan lowered its key rate to 0.1% and expanded its role in purchasing government and corporate debt.[/R]

Global Markets

U.S. stocks flirted with gains after the White house agreed to release $13.4 billion in emergency loans to General Motors and Chrysler. The two companies may receive additional $4 billion after March if they propose a business survival plan that the Treasury Office approves. President Bush sidestepped disagreement among lawmakers in his party and stressed that economic recession may be “longer and deeper” if these companies were allowed to failed in a disorderly way.

The Bank of Japan lowered its key lending rate to 0.1% from 0.3% and indicated that it will add liquidity to the financial systems. The central bank will expand its debt buyback program and buy commercial paper and purchase government debt. The bank also offered dire outlook for the economy and said economic “conditions are likely to increase in severity” on the downward.

Separately, Japan is likely to buy 20 trillion yen or $220 billion of stocks controlled by banks to support capital markets and increase lending.

HSBC Holdings Plc dropped in New York, Hong Kong and in UK trading after Citigroup and ten other financial institutions debts were cut by S&P rating agency. CLSA Asia Pacific Research also suggested that HSBC may need to raise $14 billion as debt related expenses rise. For the year, HSBC in Hong Kong has fallen 42%, in New York has declined 45% and in London dropped 26%.

North American Markets

Dow Jones Industrial Average lost 25.88 or 0.3% to a close of 8,579.11, S&P 500 Index increased 2.60 or 0.29% to 887.88, and Nasdaq Composite Index gained 11.95 or 0.8% to close at 1,564.32. In Toronto, TSX Composite Index increased 1.5% or 126.65 to 8,552.00.

Of the stocks in Dow Jones Industrial Average 13 increased and 17 declined.

Citigroup Inc led decliners in the Dow with a loss of 5.5% followed by losses in Chevron Corp of 3%, in Exxon Mobil Corp of 2.6%, in Walt Disney Company of 1.80%, in Coca Cola Company of 1.7% and in McDonalds Corp of 1.6%.

General Motors led gainers in the Dow with a rise of 23% followed by increase in General Electric of 3.4%, in Merck & Company of 3%, in American Express of 2.8% and in AT&T Inc of 1.5%.

Of the stocks in S&P 500 index, 299 increased, 195 decreased and 6 were unchanged. Of the index stocks, 34 fell more than 3%, 101 closed above 3%. Of the index stocks 101 surged more than 10%.

General Motors led gainers in the S&P 500 index with a rise of 23% followed by increase in Darden Restaurant of 19.1%, in Prologis of 15.2%, in Micron Technology of 15%, in Office Depot Inc 13.6% and in LSI Corp of 12.8%.

Cintas Corp led decliners in the S&P 500 index with a loss of 12.3% followed by declines in Weyerhaeuser Company of 9.5%, in M&T Bank Corp of 6.3% and in Fluor Corp of 5.8%.

South American Markets Indexes

Argentina led decliners in the region with a loss of 1.8% followed by losses in Brazil of 1%, in Mexico of 0.6%, in Peru of 0.50%, in Colombia of 0.13% and in Venezuela of 0.07%.

In the Caribbean region trading, Jamaican Stock Exchange dropped 1.1% to a new low of 78,677.01 from 106,779 a year ago as the country worries of a fall in tourism receipt and likely weakness in Jamaican dollar.

Europe Markets Review

In London FTSE 100 Index traded lower 43.73 or 1.01% to 4,286.93, in Paris CAC 40 Index decreased 8.25 or 0.26% to 3,225.90 and in Frankfurt DAX index traded lower 59.70 or 1.26% to 4,696.70. In Zurich trading SMI decreased 55.19 or 1.00% to 5,459.86.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 78.71 or 0.91% to 8,588.52, Hang Seng index in Hong Kong decreased 370.30 or 2.39% closed to 15,127.51 CSI 300 index in China higher 7.01 or 0.34% closed to 2,052.11. ASX 200 index in Australia increased 34.50 or 0.96% to close 3,615.70. The KL Composite index in Malaysia lower 4.10 or 0.47% closed to 876.40.

The Kospi Index in South Korea increased 5.06 or 0.43% to close at 1,180.97. SET index in Thailand closed lower 4.71 or 1.04% to 447.01 and JSE Index in Indonesia decreased 3.48 or 0.26% to 1,348.28. The Sensex index in India increased 23.48 or 0.23% closed to 10,099.91.

Commodities, Metals, and Currencies

Crude oil decreased 6.5% or $2.35 to close at $33.87 a barrel for a front month contract, natural gas decreased 22 cents to $5.33 per mBtu and gasoline futures increased 1.70 cents to close at 98.00 cents per gallon.

Wheat futures closed down 8.25 cents in Chicago trading and closed at $5.63 a bushel. Sugar decreased 0.88 cent to 10.95 cents a pound. Soybean future closed down 2 cent to $8.72 a bushel.

Gold decreased $21.40 in New York trading to close at $839.20 per ounce, silver closed down 25 cent to $10.87 per ounce and copper for the front month delivery increased 2.35 cents to $1.325 per pound.

Dollar edged higher against euro to $1.3914 and fell against yen to 89.1050.

Yields on 10-year U.S. bonds increased to 2.12% and with 30-year maturities increased to 2.56%.