Global Markets Weak, GM Reports Loss

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

Global markets continue to trade downward as economic slump widen around the world and U.S. lawmakers waver. Japan automakers slash production. General Motors report second worst annual loss. UBS replaces its chief in less than two years and looks for ways to slash operating costs.

[R]8:45AM New York – Nervous European markets edge higher. Japan automakers slash production. General Motors report second worst annual loss.[/R]

Global markets continue to trade downward as economic slump widen around the world and U.S. lawmakers waver. The global banking system, still fragile as the U.S. led crisis show no sign of abetting. The financial crisis has blown over to worldwide recession and UK is likely to enter into sever recession.

U.S. lectured the world in the eighties and nineties and touted the benefits of free market and light regulation and urged the developing nations in Asia Europe to practice the same.

As the current crisis deepens, the U.S. lawmakers threw away the principles they urged others to follow including the Regan inspired free market philosophy and conservative Republican promoted light regulation approach.

The U.S. is on the verge of nationalizing the entire banking sector, brokerage industry and auto makers. The two government sponsored housing agencies are teetering on bankruptcy and more than two million home owners in the country are expected to be in foreclosure. The effects of U.S. encouraged reckless speculation are now reverberating worldwide and show no signs of abetting.

Japan’s three largest automakers cut their production by 50% in January as exports to the U.S. plunge and domestic demand remain weak. Also, Japan China trade is expect to decline more than 20% in the current year after rising for eleven years in a row.

Yen in currency trading against dollar fell as economic recession deepen and domestic demand remains weak.

Stocks in Shanghai plunged 5% as economic stimulus fail to convince investors that current economic slowdown can be contained with the government intervention alone.

General Motors reported $9.6 billion in fourth quarter loss or $15.71 per share. For the year the company reported second largest loss of $30.9 billion after losing $38.7 billion in 2007.

General Motors is hoping to receive $16.6 billion in financing from the President Obama task force. Sales in fourth quarter plunged 34% to $30.8 billion and pension fund is underfunded by $12.4 billion.

UK is preparing to nationalize two loss making banks as it prepares to offer loan guarantees. UK will offer loan and debt guarantees of 325 billion pounds to RBS and Lloyds Banking Group Plc and urged the two lenders to increase lending. Chancellor of the Exchequer Alistair Darling also proposed to cut 650,000 pound pension plan of the former chief executive Fred Godwin.

UBS, the largest Swiss bank operating under the supervision of the Swiss government replaced chief executive Marcel Rohner with Oswald Gruebel, the former head of Credit Suisse Group AG.

Gruebel cautioned that substantial operating costs at the bank will have to cut as clients withdraw funds, the U.S. probes for tax evasion and the bank wrote-off $49.5 billion in mortgage securities related assets, the largest loss by a single entity in the world in the current financial crisis.

Europe Markets Review

In London FTSE 100 Index traded higher 39.62 or 1.03% to 3,888.60, in Paris CAC 40 Index increased 19.00 or 0.70% to 2,715.92 and in Frankfurt DAX index traded higher 29.18 or 0.76% to 3,875.39. In Zurich trading SMI increased 48.10 or 1.02% to 4,750.60.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 3.29 or 0.04% to 7,457.93, Hang Seng index in Hong Kong decreased 110.14 or 0.85% closed to 12,894.94, CSI 300 index in China lower 114.07 or 4.95% closed to 2,190.18. ASX 200 index in Australia increased 18.00 or 0.54% closed to 3,345.50. The KL Composite index in Malaysia lower 3.09 or 0.34% closed to 893.42.

The Kospi Index in South Korea decreased 12.29 or 1.15% to close at 1,054.79. SET index in Thailand closed lower 2.30 or 0.53% to 431.94 and JSE Index in Indonesia decreased 9.79 or 0.75% closed to 1,290.32. The Sensex index in India increased 52.30 or 0.59% closed to 8,954.86.