Markets in New York, Europe Fight Bank Worries

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

The U.S. stocks edge higher after the Bank of America was offered emergency loan of $20 billion. The troubled bank and Citigroup declared larger than expected losses. UK is considering to offering more loan guarantees to banks, mortgage and corporate loans. Companies in Asia trim production.

[R]5:00PM New York – 11:00PM Frankfurt, 4:00AM Sydney – The U.S. stocks edged higher after the Bank of America was offered emergency loan of $20 billion. The troubled bank and Citigroup declared larger than expected losses. UK is considering to offering more loan guarantees to banks, mortgage and corporate loans. Companies in Asia trim production and raise estimates of losses.[/R]

The U.S. banks continue to slide after Bank of America and Citigroup reported larger than expected quarterly losses. Barclays plunged 26% on the worries that the bank will need more capital. Elizabeth Arden dropped 39% and Estee Lauder declined 14% on weak earnings outlook.

Bank of America fourth quarter revenues increased 22.5% to $15.68 billion and net loss was $1.79 billion or 48 cents a share. Citigroup Inc fourth quarter revenues fell 13% to $5.6 billion and net loss was $8.29 billion or $1.72 a share.

UK plans to provide additional guarantee of £100 billion for mortgage and corporate loans and may guarantee as much as 75% of bank debts. That news and the U.S. plan to offer emergency loan of $20 billion to Bank of America lifted sentiment in trading but failed to lift broader market.

More companies in Japan lower estimates of earnings or forecast losses and cut production. Honda trimmed its production schedule for the third time in a year and Fuji Heavy Industries estimated a higher fiscal loss in the current year. Stocks in trading rallied after yen weakened.

In Hong Kong, HSBC was downgraded Goldman Sachs and cut its price target. The second downgrade in a week only confirmed the ongoing weakness in the financial sector that is beginning to spill over in Asia. Separately, Hong Kong office rents are expected to fall in half in the next two years.

Foreign direct investment in India tumbled as investors pulled capital around from the emerging markets. Stocks in Mumbai rose after the U.S. offered emergency funding to Bank of America. Larsen & Toubro entered in agreement with Westinghouse to build nuclear plant. Reliance petrol exports begin.

Australian stocks failed to rebound after a sharp fall on weak employment data a day ago. Rio Tinto profit estimate was cut by 40% on lower prices and production volume. Woodside Natural Gas suspended off-shore LNG terminal project in Los Angeles.

American Markets Reviews

Dow Jones Industrial Average increased 68.73 or 0.84% to a close of 8,281.22, S&P 500 increased 6.38 or 0.76% to 850.12, and Nasdaq Composite Index increased 17.49 or 1.16% to a close of 1,529.33. In Toronto TSX Composite increased 40.79 or 0.46% to close at 8,920.40.

In South American trading Brazil Bovespa Index increased 0.5% or 190.46 to 39,341.54 and Mexico Bolsa Index edged higher 0.2% or 44.90 to 20,325.39.

Argentina decreased 0.2%, Chile increased 0.6%, Peru increased 1.3% and Colombia increased 0.14%. Venezuela added 0.2%.

U.S. Stock Movers

Of the stocks in S&P 500 index, 340 increased, 155 declined and 5 were unchanged.

Bank of America led decliners in the index with a loss of 13% followed by losses in Estee Lauder of 10.5%, in PNC Financial of 9.4%, in Wells Fargo of 8.2%, in JP Morgan Chase of 7.9%, in M&T Bank Corp of 7.5% and in Avon Products of 7.3%.

First Horizon led gainers in the index with a rise of 20% followed by increase in Genworth Financial of 18.5%, in Micron Tech of 13%, in Tesoro Corp of 9.1%, in Huntington Banc of 7.2% and in Best Buy Company of 7%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 206.84 or 2.58% to 8,230.15, Hang Seng index in Hong Kong increased 12.55 or 0.09% closed to 13,255.51 CSI 300 index in China higher 35.34 or 1.81% closed to 1,990.21. ASX 200 index in Australia increased 21.40 or 0.61% closed to 3,550.90. The KL Composite index in Malaysia lower 0.98 or 0.11% closed to 896.47.

The Kospi Index in South Korea increased 23.86 or 2.15% to close at 1,135.20. SET index in Thailand closed higher 8.94 or 2.10% to 435.20 and JSE Index in Indonesia increased 20.38 or 1.52% closed to 1,363.88. The Sensex index in India increased 276.85 or 3.06% closed to 9,323.59.

Europe Markets Review

In London FTSE 100 Index closed higher 25.95 or 0.63% to 4,147.06, in Paris CAC 40 Index increased 20.87 or 0.70% to close at 3,016.75 and in Frankfurt DAX index higher 29.55 or 0.68% to close at 4,366.28. In Zurich trading SMI increased 53.10 or 0.99% to close at 5,435.54.

Commodities, Bonds and Currencies

Yields on 10-year bond increased to 2.32% and on 30-year bonds were unchanged to 2.87%.

The U.S. dollar dropped to $1.3266 to a euro and against the Japanese yen rose to 90.74 yen.

Immediate futures prices of Texas crude oil increased to $0.55 to $35.95 a barrel, for natural gas decrease 6 cents to $4.78 per mbtu and gasoline prices decreased 0.06 cents to 147.35 cents a gallon.

Futures of corn increased 25.75 cent to $3.91, soybean increased 25.50 cents to $10.20, sugar increased 0.30 cents to 12.26 a pound and wheat increased 9.50 cent to $5.78 a bushel.

In metals trading, copper prices rose 7.15 cents to $1.52 a pound, gold increased $34.20 to $841.50 per ounce and silver was increased 83 cents to $11.27.