U.S. Indexes Plunge to 12-Year Low

123jump.com Staff
06 Mar, 2009
New York City

World markets dropped as global investors held hostage to the political inaction in Washington. U.S. led world recession continue to deepen and widen across industries and nations around the world. Central banks in Europe and UK lowered interest rates and UK prepares to print money. Gold shines.

[R]5:00PM New York – 11:00PM Frankfurt, 4:00AM Sydney – World markets dropped as global investors held hostage to the political inaction in Washington. U.S. led world recession continue to deepen and widen across industries and nations around the world. The fate of dollar is uncertain as U.S. shows no inclination to cut its current account deficit.[/R]

U.S. market indexes dropped between 4% and 5% as more investors face a reality of lower corporate earnings, widening recession, mounting job losses and regulators and lawmakers adopting socialist policies. Banks and insurance companies fell more than 15% as credit markets show no sign of unlocking and banks appear to be incapable of managing risk.

European stocks fell sharply on economic concerns after leading central banks in Europe cut half-point interest rate and economic data from the US, Germany and the euro region confirmed the deepening of recession. ECB and BoE lowered rates by 0.5% and ECB lowered growth estimate.

The Bank of England prepared to print money, a highly inflationary step that may hamper UK economic growth in the longer term. Investors were also shaken by the news that UK home prices fell further in February.

Corporate profits in Japan plunge 65% and companies slash capital spending 18% as domestic and export markets shrink. Japan in the latest quarter ending in December suffered worst economic decline in more than five decades. Stocks rallied on the gains in the region on China spending plan.

China targeted economic growth of 8% in the current year and Premier Jiabao did not expand its current stimulus package of Rmb4 trillion. Stocks fell in Shanghai and Hong Kong after surging in previous session ahead of the announcement. Hutchison Telecom surged 10%.

Reserve Bank of India lowered its key lending rate to 5% to stimulate demand and maintain liquidity in the financial system. The latest measure of wholesale inflation declined. Stocks fell as foreign investors sell stocks and drive rupee to near record low. Tata Motors credit rating downgraded.

Australian trade surplus rises to A$970 million in January. Tight credit conditions weighed on housing approvals and dropped 3.7% to 9,312 units in January. The Australian regulator extends ban on covered short-selling of financial securities.

American Markets Reviews

Dow Jones Industrial Average decreased 281.40 or 4.1% to a close of 6,594.44, S&P 500 Index gained 16.54 or 2.4% to 712.87, and Nasdaq Composite Index dropped 54.15 or 4.0% to a close of 1,299.59. In Toronto TSX Composite declined 185.58 or 2.4% to close at 7,629.17.

In Latin American trading, Mexico Bolsa Index decreased 459.94 or 2.6% to 17,365.02 and Brazil Bovespa Stock Index decreased 2.69% or 1,033.31 to 37,368.93.

Argentina decreased 3.2%, Chile declined 2.2%, Peru edged lower 1.4% and Colombia fell 1.5%.

U.S. Stock Movers

Of the stocks in S&P 500 index, 22 increased, 478 declined and none were unchanged.

Marshall & Ilsley led the decliners in the S&P 500 index with a loss of 22% followed by losses in MBIA Inc of 20.5%, in Fifth Third Bancorp of 20.4%, in Hartford Financial Services of 19.7%, in Prudential Financial of 18.3%.

Family Dollar led gainers in the S&P 500 index with a rise of 12.4% followed by gains in Ciena Corp of 11%, in Newmont Mining of 4.3%, in Altria Group Inc of 3.9% and in Adobe Systems of 3.7%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 142.53 or 1.95% to 7,433.49, Hang Seng index in Hong Kong decreased 119.91 or 0.97% closed to 12,211.24, CSI 300 index in China higher 19.77 or 0.87% closed to 2,304.92. ASX 200 index in Australia increased 22.10 or 0.70% closed to 3,188.50. The KL Composite index in Malaysia higher 2.31 or 0.27% closed to 869.24.

The Kospi Index in South Korea decreased 1.08 or 0.10% to close at 1,058.18. SET index in Thailand closed lower 0.75 or 0.18% to 417.11 and JSE Index in Indonesia decreased 1.31 or 0.10% closed to 1,288.07. The Sensex index in India decreased 248.57 or 2.94% closed to 8,197.92.


Europe Markets Review

In London FTSE 100 Index closed lower 116.01 or 3.18% to 3,529.86, in Paris CAC 40 Index decreased 106.05 or 3.96% to close at 2,569.63 and in Frankfurt DAX index lower 195.45 or 5.02% to close at 3,695.49. In Zurich trading SMI decreased 73.49 or 1.65% to close at 4,390.18.

Commodities, Bonds and Currencies

Yields on 10-year bond increased to 2.80% and on 30-year bonds increased to 3.47%.

The U.S. dollar edged higher to $1.2685 to a euro and against the Japanese yen inched lower to 97.26 yen.

Immediate futures prices of Texas crude oil increased $0.28 to $43.89 a barrel, for natural gas increased $0.03 cent to $4.12 per mbtu and gasoline prices increased 0.73 cents to 132.00 cents a gallon.

Futures of corn increased 2.50 cent to $3.61, soybean increased 5.00 cents to $8.57, sugar edged higher to 0.10 a pound to 12.93 and wheat increased 1.75 cents to $5.16 a bushel.

In metals trading, copper prices increased 3.40 cents to $1.68 a pound, gold increased $12.90 to $940.70 per ounce and silver increased 0.28 cent to $13.40.