Banks Lift Indexes; Oil Jumps

123jump.com Staff
24 Apr, 2009
New York City

U.S. stocks closed higher after earnings from Ford and American Express lifted stocks in financial and auto sectors. UK reported its worst quarterly economic decline in 30 years. Banks offer to cut the loans by 46% at Chrysler in exchange of 40% stake in the company.

5:00PM New York, 11:00PM Frankfurt, 8:00AM Sydney[R]– U.S. stocks closed higher after earnings from Ford and American Express lifted stocks in financial and auto sectors. UK reported its worst quarterly economic decline in 30 years.[/R]

Global Markets

U.S. stocks closed higher after durable goods orders declined less than expected and earnings from Microsoft, Amazon.com, American Express and Ford met or exceeded expectations. Durable goods orders fell in March after rising in February.

The Treasury has left door open for Chrysler and GM to prepare for a bankruptcy filing. The stress test at banks may show that different banks need different amount of capital and most banks are ‘adequately capitalized’ according to conversations with Fed officials.

According to the latest stress test guidelines released by the Fed, the banks’ capital needs will be tested based on two economic scenarios.

In the first scenario, GDP is expected to decline 2% in 2009 and rebound in 2010 at 2.1% rate. Unemployment is expected to be at 8.4% in 2009 and drop further to 8.8%. House prices decline, the root cause of the current financial malaise, is estimated at 14% in 2009 and additional 4% in 2010.

In the second scenario, the more stringent scenario, the economy is expected to shrink 3.5% in 2009 and recover with 0.5% growth in 2010. Unemployment is expected to be 8.9% in 2009 and increase to 10.3% in 2010. Home prices are expected to fall 22% in 2009 and drop additional 7% in 2010.

All banks with more than $100 billion in assets were required to participate in the capital assessment program between February 25 and April 29. In all 19 banks that participated in the program hold two-thirds of assets and more than one half of all loans in the U.S. banking system.

Losses at these 19 firms are estimated to be approximately $400 billion in the last six quarters. Stress tests are conducted to measure loan losses in 12 categories of loans held in two different economic scenarios till the end of the fourth quarter 2010.

More than 150 regulators and examiners from various federal agencies are involved in the assessment.

European stocks regained new momentum after banks and auto stocks closed higher. Earnings from American Express and less than expected loss at Ford lifted stocks in the sector. Energy and mining stocks closed higher in London and auto and banks led the gainers in Paris and Frankfurt markets.

UK GDP shrinks 1.9% in the first quarter, the fastest pace in 30 years as weakness in manufacturing and services intensify. Retail sales volume increased in March and in the three months to the quarter. Banks, retailers and miners closed higher in trading. Barclays and Debenhams surged 8%.

Stocks in Mumbai rallied to a six-month high on rising earnings bolstered sentiment among investors. The steady stream of better than expected earnings, the prediction of normal monsoon and a rising flow of funds from foreign investors lifted the benchmark index. The index has recovered 39% since March 9.

North American Markets

Dow Jones Industrial Average increased 119.23 or 1.50% to a close of 8,076.29, S&P 500 Index added 14.31 or 1.7% to 866.23, and Nasdaq Composite Index surged 42.08 or 2.6% to close at 1,694.29.

Of the stocks in S&P 500 index, 298 increased, 200 declined and 2 were unchanged.

CIT Group led decliners in the S&P 500 index with a loss of 11.5% followed by losses in IMS Health Inc of 6.8%, in Huntington Bancorp of 6.6%, in Invesco Ltd of 6.2%, in Regions Financial of 4.5% and in Autonation Inc of 4.4%.

Eastman Chemical led gainers in the S&P 500 index with a surge of 20.8% followed by gains in American Express of 20%, in Masco Corp of 16.2%, in Juniper Networks of 15.9%, in Lennar Corp of 15% and in CB Richard Ellis of 14.6%.

South American Markets Indexes

Mexico Bolsa Index increased 752.84 or 3.5% to 22,582.17. Brazil Bovespa Stock Index added 970.62 or 2.1% to 46,771.79.

Argentina Merval Index added 2.5%, Chile Stock Market Select index declined 0.2% and Peru Lima General Index increased 2%. Colombia IGBC General Index edged up 2.3% and Venezuela Stock Market Index lost 0.6%.

Europe Markets Review

In London FTSE 100 Index closed higher 137.76 or 3.43% to 4,155.99, in Paris CAC 40 Index increased 94.23 or 3.13% to close at 3,102.85 and in Frankfurt DAX index higher 136.11 or 3.00% to close at 4,674.32. In Zurich trading SMI increased 89.15 or 1.77% to close at 5,113.05.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 139.02 or 1.57% to 8,707.99, Hang Seng index in Hong Kong increased 44.39 or 0.29% closed to 15,258.85, CSI 300 index in China lower 20.68 or 0.80% closed to 2,572.89. ASX 200 index in Australia decreased 30.70 or 0.82% closed to 3,712.30. The KL Composite index in Malaysia higher 14.04 or 1.43% closed to 992.68.

The Kospi Index in South Korea decreased 14.70 or 1.07% to close at 1,354.10. SET index in Thailand closed higher 8.01 or 1.72% to 474.07 and JSE Index in Indonesia decreased 1.36 or 0.09% closed to 1,591.34. The Sensex index in India increased 194.06 or 1.74% closed to 11,329.05.

Commodities, Metals, and Currencies

Crude oil increased $2.00 to close at $51.60 a barrel for a front month contract, natural gas decreased 13 cent to $3.28 per mBtu and gasoline futures increased 4.59 cents to close at 144.03 cents per gallon.

Wheat futures closed up 2.50 cents in Chicago trading and closed at $5.4325 a bushel. Sugar increased 0.51 cent in trading at 14.18 cents a pound. Soybean future closed up 2 cent to $10.34 a bushel.

Gold increased $7.10 in New York trading to close at $913.70 per ounce, silver closed up $0.11 to $12.89 per ounce and copper for the front month delivery increased 5.65 cents to $2.0475 per pound.

Dollar edged lower against euro to $1.3241 and edged lower against yen to 97.10.

Yields on 10-year U.S. bonds increased to 2.98% and with 30-year maturities closed up at 3.87%.