Worried Global Markets Falter

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

U.S. stocks dropped after investors faced bankruptcy prospect at General Motors, more government aid to banks and sharp decline in earnings at the largest aluminum company in China. Metals and crude oil declined in New York, Europe and Asian trading. Markets in Europe and Japan dropped 4%.

5:00PM New York, 11:00PM Frankfurt, 8:00AM Sydney[R]– U.S. stocks dropped after investors faced bankruptcy prospect at General Motors, more government money to banks and sharp decline in earnings at the largest aluminum company in China.[/R]

Global Markets

U.S. stocks declined on the worries that GM may not be able to avert bankruptcy. General Motors dropped 25%. Citigroup, Wells Fargo, Bank of America and Lincoln National fell sharply after Treasury Secretary suggested that banks will need more money from the government. Lincoln National, one of the largest insurance companies in the U.S. failed to qualify for the federal assistance.

Obama administration was clearly on the offensive after the meeting with the leaders of banks on Friday. The administration removed the chief at General Motors and made it a condition for Chrysler to deal with Fiat as a condition to receive the $6 billion aid money. The administration clearly indicated that GM has last chance to get its act together and industry watchers raised bankruptcy prospects.

In Europe markets dropped between 4% and 5% after weakness in New York trading. Spain seized its first bank in sixteen years after it failed to find a buyer for a struggling bank and a Scotland based building society was merged with another based in U.K.

Stocks in Japan fell 4.5% after banks and real estate companies plunged. Mitsui Fudosan Company, the largest real estate developer in Japan and Mizuho Financial Group plunged 9%. Realtor Azel Corp filed for bankruptcy protection with liabilities of 44.2 billion yen or $460 million.

Japan Automobile Manufacturers Association said that production in February at twelve manufacturers plunged 56% from a year ago month and a decline in shipment to North America dragged exports down by 65%.

China based Aluminum Corp of China Ltd reported 2008 earnings just above breakeven and estimated loss in the first quarter of this year. The largest aluminum maker also plans to cut capital spending this year by 34%. Chalco, as the company is popularly known dropped 12% in Hong Kong trading and dragged metal prices in world markets trading.

North American Markets

Dow Jones Industrial Average dropped 254.20 or 3.3% to a close of 7,522.02, S&P 500 Index decreased 28.41 or 3.5% to 787.53, and Nasdaq Composite Index decreased 43.40 or 2.8% to close at 1,501.80.

Of the stocks in S&P 500 index, 35 increased, 464 declined and 1 was unchanged.

Lincoln National Corp led decliners in the S&P 500 index with a loss of 39% followed by losses in Manitowoc Company of 33.4%, in General Motors of 25.4%, in Principal Financial of 22.5%, in Capital One Financial of 20.3% and in Prudential Financial of 19%.

Fifth Third Bancorp led gainers in the S&P 500 index with a rise of 5.5% followed by gains in Apollo Group of 3%, in Allergan Inc of 2.9%, in Gilead Sciences of 2.8% and in Abbott Labs of 2.7%.

South American Markets Indexes

Mexico Bolsa Index decreased 785.02 or 3.9% to 19,530.15. Brazil Bovespa Stock Index fell 1,254.16 or 3% to 40,653.13.

Argentina Merval Index declined 3.6%, Chile Stock Market Select fell 2.1% and Peru Lima General Index decreased 4.8%. Venezuela added 0.42% and Colombia IGBC General Index increased 1.1%.

Europe Markets Review

In London FTSE 100 Index closed lower 135.94 or 3.49% to 3,762.91, in Paris CAC 40 Index decreased 121.28 or 4.27% to close at 2,719.34 and in Frankfurt DAX index lower 214.32 or 5.10% to close at 3,989.23. In Zurich trading SMI decreased 126.57 or 2.60% to close at 4,745.76.


Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 390.89 or 4.53% to 8,236.08, Hang Seng index in Hong Kong decreased 663.17 or 4.70% closed to 13,456.33, CSI 300 index in China lower 14.44 or 0.58% closed to 2,484.49. ASX 200 index in Australia decreased 67.90 or 1.85% closed to 3,604.40. The KL Composite index in Malaysia lower 16.09 or 1.82% closed to 869.34.

The Kospi Index in South Korea decreased 40.05 or 3.24% to close at 1,197.46. SET index in Thailand closed lower 11.21 or 2.54% to 429.60 and JSE Index in Indonesia decreased 43.65 or 2.98% closed to 1,419.09. The Sensex index in India decreased 480.35 or 4.78% closed to 9,568.14.

Commodities, Metals, and Currencies

Crude oil decreased $3.91 to close at $48.47 a barrel for a front month contract, natural gas increased 6 cents to $3.79 per mBtu and gasoline futures decreased 10.32 cents to close at 138.47 cents per gallon.

Wheat futures closed up 5.25 cents in Chicago trading and closed at $5.12 a bushel. Sugar decreased 14 cents in trading at 12.48 cents a pound. Soybean future closed down 12.50 cent to $9.04 a bushel.

Gold decreased $6.20 in New York trading to close at $919.10 per ounce, silver closed down $0.20 to $13.05 per ounce and copper for the front month delivery decreased 6.25 cents to $1.77 per pound.

Dollar edged higher against euro to $1.3205 and gained against yen to 97.30.

Yields on 10-year U.S. bonds decreased to 2.71% and with 30-year maturities declined to 3.60%.