Crude Oil Below $35; Banks Lead Decliners

123jump.com Staff
15 Jan, 2009
New York City

Banks and brokerages fell sharply in New York trading. The European Central Bank lowered rate to 2% as the fears of worldwide recession deepens. Banks in UK and in Europe declined as more capital may be needed from the government to bolster the financial system. Crude oil futures dropped below $35.

[R]5:00PM New York – 11:00PM Frankfurt, 4:00AM Sydney – Banks and brokerages fell sharply in New York trading. The European Central Bank lowered rate to 2% as the fears of worldwide recession deepens. Banks in UK and in Europe declined as more capital may be needed from the government to bolster the financial system.[/R]

Banks and financial services stocks led the decliners in New York trading. Bank of America may need more capital from the government after the recently acquired Merrill Lynch lost more than expected. Most banks declined more than 10%. Marshall & Ilsley reported a loss.

UK and European markets fell on the worries that the banks may need more capital and financial crisis is likely to get worse before it stabilizes. HSBC, Barclays, Deutsche Bank and RBS declined. The ECB lowered key lending rate 50 basis points to 2% and indicated near term uncertainty remains high.

Ruble continued its weeklong slide and reached to a new low in ten years. Ruble, now down more than 25% in the last five months against dollar, is expected to drop another 10% in the next three to six months if the crude oil prices remain below $50 a barrel.

Machinery orders in Japan decline 16.2% to 754 billion yen in November. The sharp decline in orders was driven by weakness in domestic and foreign orders. Stocks plunged on weaker than expected orders. Nissan trims domestic auto production. Sanyo lowers the annual profit target to break even.

Latest economic measures in China to support steel and auto industry failed to lift market sentiment in Hong Kong and Shanghai trading. Stocks in Hong Kong fell 3.4% and Shanghai had negative bias. China proposed to offer one time tax relief to small car buyers. Foreign investment rose 24% in 2008.

Stocks in Australia dropped 4.3% after unemployment rate in December rose to 4.5%. The sharp increase in the rate is another confirmation that the commodities driven economy is decelerating rapidly. However, Rio Tinto coal production in the three months to December rose 8% from the previous quarter.

American Markets Reviews

Dow Jones Industrial Average increased 12.35 or 0.15% to a close of 8,212.49, S&P 500 increased 1.12 or 0.13% to 843.74, and Nasdaq Composite Index increased 22.20 or 1.49% to a close of 1,511.84. In Toronto TSX Composite increased 191.25 or 2.20% to close at 8,879.61.

In South American trading Brazil Bovespa Index increased 3.1% to 39,151.08 and Mexico Bolsa Index dropped 0.44% or 191.25 to 20,280.49.

Argentina increased 1.1%, Chile increased 1.40% but Peru declined 0.01% but Colombia declined 1.24%. Venezuela declined 0.2%.

U.S. Stock Movers

Of the stocks in S&P 500 index, 344 increased, 151 declined and 5 were unchanged.

Marshall & Ilsley led the decliners in the S&P 500 index with a loss of 26% followed by losses in Bank of America of 18.4%, in Citigroup Inc of 15.5%, in Fifth Third Bancorp of 14.2%, in Huntington Banc of 13.3% and in Zions Bancorp of 13.1%.

Wells Fargo, Huntington Bank, Comercia, Key Corp, Regions Bank, MasterCard Inc and SunTrust dropped more than 10%.

Amphenol Corp led gainers in the S&P 500 index with a rise of 14.8% followed by increase in Life Technologies of 10.1%, in Harris Corp of 8.9%, in Wyndham Worldwide of 8.6% and in Prologis of 7.8% and in Apollo Group of 7.8%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 415.14 or 4.92% to 8,023.31, Hang Seng index in Hong Kong decreased 461.65 or 3.37% closed to 13,242.96 CSI 300 index in China lower 0.37 or 0.02% closed to 1,954.87. ASX 200 index in Australia decreased 157.50 or 4.27% closed to 3,529.50. The KL Composite index in Malaysia lower 16.01 or 1.75% closed to 897.45.

The Kospi Index in South Korea decreased 71.34 or 6.03% to close at 1,111.34. SET index in Thailand closed lower 13.25 or 3.01% to 426.26 and JSE Index in Indonesia decreased 43.41 or 3.13% closed to 1,343.49. The Sensex index in India decreased 323.75 or 3.46% closed to 9,046.74.

Europe Markets Review

In London FTSE 100 Index closed lower 59.53 or 1.42% to 4,121.11, in Paris CAC 40 Index decreased 56.12 or 1.84% to close at 2,995.88 and in Frankfurt DAX index lower 85.62 or 1.94% to close at 4,336.73. In Zurich trading SMI increased 3.63 or 0.07% to close at 5,382.44.

Commodities, Bonds and Currencies

Yields on 10-year bond declined to 2.20% and on 30-year bonds were unchanged to 2.87%.

The U.S. dollar increased to $1.3144 to a euro and against the Japanese yen rose to 89.82 yen.

Immediate futures prices of Texas crude oil decreased to $2.48 to $34.80 a barrel, for natural gas decrease 9 cents to $4.88 per mbtu and gasoline prices decreased 1.47 cents to 115.30 cents a gallon.

Futures of corn decreased 1.25 cent to $3.65, soybean increased 23 cents to $9.94, sugar increased 0.53 cents to 11.96 a pound and wheat declined 5.50 cent to $5.68 a bushel.

In metals trading, copper prices rose 1.25 cents to $1.50 per pound, gold increased $6.90 to $815.70 per ounce and silver was increased 11 cents to $10.59.