Fragile Banks Drag World Markets

123jump.com Staff
20 Feb, 2009
New York City

World markets declined with persistent worries of bank nationalization in the U.S. and the size of the bailout of banks in Eastern Europe. Gold price crossed $1,000 an ounce and market indexes in Europe drop to five-year lows. Stocks in Japan drop to 24-year lows. Corporate earnings remain weak.

[R]5:00PM New York – 11:00PM Frankfurt, 4:00AM Sydney – World markets declined with persistent worries of bank nationalization in the U.S. and the size of the bailout of banks in Eastern Europe.[/R]

World stocks declined as prices of metals and corporate earnings declined. Gold price crossed $1,000 an ounce and market indexes in Europe drop to five-year lows. Stocks in Japan drop to 24-year lows. Corporate earnings remain weak and investor confidence in Europe and U.S. is at its low.

Consumer price index showed a mild rebound in January after dropping in December. The rebound, unexpected is not likely to persist in the rest of months in the first quarter but inflation may be on the rise in the longer term. The reckless spending in Washington may raise the inflation curve.

UK stocks slumped after economic data and poor earnings confirmed that the economic slump was worsening. Car production slumped 59% in January, while home repossessions increased 54% last year. Retail Sales however recovered in January according to the Office for National Statistics.

European stocks fell on a weakness in financial stocks as the financial outlook deteriorated and prospect of another rate cut dimmed. A manufacturing and services survey in France showed that both sectors contracted at a rapid rate in February.

American Markets Reviews

Dow Jones Industrial Average decreased 100.3 or 1.34% to a close of 7,365.67, S&P 500 dropped 8.89 or 1.14% to 770.05, and Nasdaq Composite Index edged down 1.59 or 0.11% to a close of 1,441.23. In Toronto TSX Composite lost 235.36 or 2.8% to close at 7,949.99.

In Latin American trading Brazil Bovespa Index decreased 1,015.69 or 2.6% to 38,714.64 and Mexico Bolsa Index dropped 358.24 or 1.92% to 18,324.23.

Argentina declined 1.6%, Chile rose 1.4%, Peru decreased 0.7% and Colombia edged lower 1.70%. Venezuela gained 0.6%.

U.S. Stock Movers

Of the stocks in S&P 500 index, 169 increased, 328 declined and 3 were unchanged.

Citigroup led the decliners in the S&P 500 index with a loss of 22% followed by losses in Fifth Third Bancorp with a loss of 15%, in Dynegy Inc of 14.7%, in Moody’s Corp of 13.2%, in Tesoro Corp of 12.8%.

Huntington Banc led gainers in the S&P 500 index with a rise of 32.1% followed by gains in New York Times of 16%, in KeyCorp of 13.3%, in Intuit Inc of 12.8% and in HCP Inc of 11.1%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 141.27 or 1.87% to 7,416.38, Hang Seng index in Hong Kong decreased 324.19 or 2.49% closed to 12,699.17, CSI 300 index in China higher 45.91 or 2.00% closed to 2,344.32. ASX 200 index in Australia decreased 46.50 or 1.35% closed to 3,402.40. The KL Composite index in Malaysia lower 9.88 or 1.10% closed to 889.71.

The Kospi Index in South Korea decreased 41.15 or 3.72% to close at 1,065.95. SET index in Thailand closed lower 6.95 or 1.57% to 434.67 and JSE Index in Indonesia decreased 26.75 or 2.02% closed to 1,296.94. The Sensex index in India decreased 199.42 or 2.21% closed to 8,843.21.

Europe Markets Review

In London FTSE 100 Index closed lower 129.31 or 3.22% to 3,889.06, in Paris CAC 40 Index decreased 122.05 or 4.25% to close at 2,750.55 and in Frankfurt DAX index lower 200.55 or 4.76% to close at 4,014.66. In Zurich trading SMI decreased 139.31 or 2.79% to close at 4,851.21.

Commodities, Bonds and Currencies

Yields on 10-year bond increased to 2.79% and on 30-year bonds decreased to 3.57%.

The U.S. dollar edged higher to $1.2828 to a euro and against the Japanese yen inched higher to 93.34 yen.

Immediate futures prices of Texas crude oil decreased $0.15 to $40.03 a barrel, for natural gas decreased $0.07 cent to $4.01 per mbtu and gasoline prices decreased 2.40 cents to 107.46 cents a gallon.

Futures of corn decreased 3 cent to $3.5025, soybean decreased 22.750 cents to $8.63, sugar declined to 0.11 a pound to 13.06 and wheat decreased 0.50 cents to $5.30 a bushel.

In metals trading, copper prices increased 5.50 cents to $1.43 a pound, gold increased $25.20 to $1,002.20 per ounce and silver increased 0.55 cent to $14.49.