Markets Dive Despite Mega-Mergers

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

Schering Plough and Merck mega-merger and Dow Chemical decision to purchase Rohm & Haas at pre-crisis market price failed to lift market sentiment in New York trading. A sharp in rise Japanese current account deficit weakened investors confidence in Asian trading.

[R]5:00PM New York – 11:00PM Frankfurt, 4:00AM Sydney – Schering Plough and Merck mega-merger and Dow Chemical decision to purchase Rohm & Haas at pre-crisis market price failed to lift market sentiment in New York trading. A sharp in rise Japanese current account deficit weakened investors confidence in Asian trading.[/R]

Schering Plough surged after the company agreed to be acquired for drug maker for $41.1 billion. The recent consolidation in the drug industry only highlights the escalating cost of the drug development. Aflac led decliners in the S&P 500 index of 14.9%.

Dow Chemical said that it will go ahead with the purchase of Rohm & Haas despite a sharp drop in market and stocks prices. The company will conduct asset sales, job elimination and issue more debts. The chemical company will raise $4.3 billion and raise $1.5 billion selling its Morton Salt unit.

U.K. government increases stake in Lloyds Banking Group. The government will replace its preference shares of 4 billion pounds to common shares to be issued at 38.4 pence a share. UK government holding in the lender may surge to 65%. Luxury home prices fall 1.5% in February.

European markets traded mixed after different sets of economic news generated mixed market sentiment. The ECB President, Jean Claude Trichet, today said the global economy may pick up in response to recent stabilization measures. The World Bank predicted first economic global shrink since the WW II.

Japan’s current account deficit rises to 172.8 billion yen in January compared to surplus of 3.2 trillion yen a year ago period. Separately, bank lending dropped 3.8% in February but regional and smaller banks increased their lending. Realty stocks declined with Mitsui Fudosan dropping 8%.

[The benchmark index in Hong Kong dropped nearly 5% after HSBC finalized the price of rights offering at a significant discount to its recent price. The news of the discount and size of the offering dragged market averages lower. Foxconn International dropped 15% after profit plunged 83%.

Indian stocks fell in volatile trading ahead of market holidays on Tuesday and on Wednesday on a weakness in regional and a weak rupee. The rupee fell to 51.65 against the dollar. Real estate linked stocks declined on a government report suggested a weakness in the industry.

Australian stocks rose 0.3% on rising metal and energy prices. Investors were also bullish after a private survey indicated that three quarters of first time home buyers are planning to buy a house because of a government grant, low interest rates and affordable prices.

American Markets Reviews

Dow Jones Industrial Average decreased 79.89 or 1.2% to a close of 6,647.05, S&P 500 Index lost 6.85 or 1.00% to 676.53, and Nasdaq Composite Index dropped 25.21 or 1.95% to a close of 1,268.64. In Toronto TSX Composite declined 24.53 or 0.32% to close at 7,566.97.

In Latin American trading, Mexico Bolsa Index decreased 79.08 or 0.46% to 16,964.36 and Brazil Bovespa Stock Index decreased 363.74 or 0.98% to 36,741.35.

Argentina decreased 1.3%, Chile increased 0.53%, Peru edged higher 1.7% and Colombia decreased 0.4%.

U.S. Stock Movers

Of the stocks in S&P 500 index, 157 increased, 330 declined and 13 were unchanged.

Aflac Inc led the decliners in the S&P 500 index with a loss of 14.5% followed by losses in Office Depot Inc of 13.4%, in Gannett Company of 11.4%, in Micron Technology of 11.4%, in Dow Chemical of 11%.

MBIA Inc led gainers in the S&P 500 index with a rise of 22.2% followed by gains in Bank of America of 10.5%, in Rohm & Haas of 16%, in General Motors of 15.9% and in Wells Fargo & Company of 15.8%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 87.07 or 1.21% to 7,086.03, Hang Seng index in Hong Kong decreased 576.94 or 4.84% closed to 11,344.58, CSI 300 index in China declined 84.05 or 3.68% closed to 2,202.53. ASX 200 index in Australia increased 9.00 or 0.29% closed to 3,154.50. The Markets of Malaysia were closed today.

The Kospi Index in South Korea increased 16.70 or 1.58% to close at 1,071.73. SET index in Thailand closed lower 8.24 or 1.96% to 411.27. The Sensex index in India decreased 165.42 or 1.99% closed to 8,160.40. The Markets of Indonesia were closed today.

Europe Markets Review

In London FTSE 100 Index closed higher 11.67 or 0.33% to 3,542.40, in Paris CAC 40 Index decreased 15.16 or 0.60% to close at 2,519.29 and in Frankfurt DAX index higher 25.62 or 0.70% to close at 3,692.03. In Zurich trading SMI decreased 3.94 or 0.09% to close at 4,307.67.

Commodities, Bonds and Currencies

Yields on 10-year bond increased to 2.90% and on 30-year bonds increased to 3.61%.

The U.S. dollar edged lower to $1.2703 to a euro and against the Japanese yen inched higher to 98.47 yen.

Immediate futures prices of Texas crude oil increased $0.9 to $47.16 a barrel, for natural gas was unchanged to $3.86 per mbtu and gasoline prices decreased 0.44 cents to 133.07 cents a gallon.

Futures of corn increased 2.00 cent to $3.67, soybean increased 9.50 cents to $8.74, sugar edged lower to 0.29 a pound to 12.49 and wheat increased 3.25 cents to $5.26 a bushel.

In metals trading, copper prices increased 1.65 cents to $1.6560 a pound, gold decreased $0.90 to $917.10 per ounce and silver increased 0.08 cent to $12.86.