Chrysler Accord; Pandemic Risks

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

World financial markets declined for the second day with larger losses in Asia and Europe. The worries of lack of adequate capital at U.S. banks continue to dominate the sentiment. A rise in the U.S. consumer confidence lifted U.S. stocks. Chrylser reaches agreement with debt holders.

[R]4:00PM New York, 10:00PM Frankfurt – World financial markets declined for the second day with larger losses in Asia and Europe. The worries of lack of adequate capital at U.S. banks continue to dominate the trading sentiment. A rise in the U.S. consumer confidence lifted stocks at close in New York.[/R]

World markets remained focused on the swine flu outbreak in Mexico and the possible pandemic outbreak. More cases of flu have been reported in the U.S. and at least two deaths in California may be linked to the flu. Tour operators and air and cruise transportation companies decline and select drug makers rise. Mexican stock settled at lower level and peso rebounded.

U.S. stocks edged higher as consumer confidence rises and worries related to adequacy of banks kept stocks in the sector lower. World Health Organization raised its swine flu alert to the highest level since 2005. U.S. Steel dropped. China based Baidu that trades in New York earnings rose 23%.

Chrysler LLC and its debt holders have reached an agreement that will eliminate nearly $6.9 billion in debt for $2 billion cash from the U.S. Treasury and 10% stake in the automaker. Chrysler also agreed with Daimler to retake its 19.9% stake and receive as much as $600 million payment to the pension fund.

The UAW union will control 55% of the reorganized automaker, 10% by bond holders and Fiat S.p.A may end up holding up to 35% of the company. It is not clear how the U.S. government will recover its existing loan of $4 billion and additional loan of $6 billion. Chrysler has until the end of April to strike a deal with all stake holders.

Stocks in Germany and France declined after markets worried on the impact of deepening spread of flu virus in Europe and North America. Daimler reported second quarterly loss in a row. Weak outlook at Air Liquid dragged French markets lower. Arcandor, TUI and Euro Disney drop.

UK stocks edged sharply lower on the growing worries of rapid spread of swine flu. Commodities and miners declined. Banks fell after Bank of America and Citi are asked to raise more capital by Fed in the U.S. More UK retailers reported a rise in sales in April. Oil, copper and gold declined.

The Sensex index in India fell sharply after gaining for six weeks in a row. Foreign institutional investors have resumed the stock purchase in India in the last three weeks. Bharti Airtel declined ahead of earnings tomorrow.

North American Markets

Dow Jones Industrial Average decreased 8.05 or 0.10% to a close of 8,016.95, S&P 500 Index decreased 2.35 or 0.3% to 855.16, and Nasdaq Composite Index declined 5.60 or 0.3% to close at 1,673.81.

Of the stocks in S&P 500 index, 206 increased, 290 declined and 4 were unchanged.

Masco Corp led decliners in the S&P 500 index with a loss of 14% followed by losses in Jacobs Engineering Group of 11.5%, in CIT Group Inc of 9.6%, in General Motors of 9.3%, in Bank of America of 8.7% and in Moody’s Corp of 7.3%.

Waters Corp led gainers in the S&P 500 index with a surge of 17% followed by gains in Office Depot Inc of 12.3%, in Southwestern Energy of 9.6%, in Coventry Health of 7.3%, in Interpublic Group of 6.5% and in Coach Inc of 6.2%.

South American Markets Indexes

Mexico Bolsa Index decreased 164.58 or 0.75% to 21,662.53. Brazil Bovespa Stock Index dropped 19.95 or 0.04% to 45,799.76.

Argentina Merval Index declined 0.06%, Chile Stock Market Select index increased 0.2% and Peru Lima General Index decreased 2.1%. Colombia IGBC General Index edged down 0.08% and Venezuela Stock Market Index edged lower 0.1%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 232.57 or 2.67% to 8,493.77, Hang Seng index in Hong Kong decreased 285.31 or 1.92% closed to 14,555.11, CSI 300 index in China higher 5.24 or 0.21% closed to 2,518.53. ASX 200 index in Australia decreased 23.20 or 0.62% closed to 3,708.40. The KL Composite index in Malaysia lower 14.42 or 1.47% closed to 965.70.

The Kospi Index in South Korea decreased 39.59 or 2.95% to close at 1,300.24. SET index in Thailand closed lower 2.27 or 0.48% to 472.72 and JSE Index in Indonesia increased 19.83 or 1.26% closed to 1,595.92. The Sensex index in India decreased 370.10 or 3.25% closed to 11,001.75.

Europe Markets Review

In London FTSE 100 Index traded lower 88.11 or 2.11% to 4,078.90, in Paris CAC 40 Index decreased 72.60 or 2.34% to 3,029.83 and in Frankfurt DAX index traded lower 121.46 or 2.59% to 4,572.61. In Zurich trading SMI decreased 95.87 or 1.85% to 5,080.10.

Commodities, Metals, and Currencies

Crude oil decreased $0.62 to close at $49.52 a barrel for a front month contract, natural gas increased 7 cent to $3.32 per mBtu and gasoline futures decreased 0.76 cents to close at 139.56 cents per gallon.

Wheat futures closed up 2.50 cents in Chicago trading and closed at $5.22 a bushel. Sugar increased 0.15 cent in trading at 14.04 cents a pound. Soybean future closed down 14 cent to $9.83 a bushel.

Gold decreased $15.10 in New York trading to close at $893.70 per ounce, silver closed down $0.51 to $12.47 per ounce and copper for the front month delivery decreased 6.25 cents to $1.92 per pound.

Dollar edged lower against euro to $1.3137 and closed down against yen to 96.41.

Yields on 10-year U.S. bonds increased to 3.00% and with 30-year maturities closed up at 3.95%.