World Markets Decline More than 1%; Bank Worries

Mukesh Buch
17 Dec, 2009
New York City

Risk appetite was on the decline in the Americas, Europe and Asia. Leading indexes in New York, Canada, Brazil, Europe and Asia declined. Investors worried that unemployment claims in the U.S. are still high and smaller nations in Europe may struggle to trim deficit.

[R]4:30 PM New York, 9:30 PM London, 8:30 AM Sydney – Risk appetite was on the decline in the Americas, Europe and Asia. Leading indexes in New York, Canada, Brazil, Europe and Asia declined. Investors worried that unemployment claims in the U.S. are still high and smaller nations in Europe may struggle to trim deficit.[/R]

The U.S. Fed left its overnight lending rate range unchanged and signaled that the economy is improving and continued its stance of low rates for an extended period of time. Metals and commodities gained in trading. Credit Suisse agreed to a $536 million fine.[/R]

Stocks in New York declined and the dollar advanced. S&P lowered its rating on Greek bonds and investors sought the safety of the dollar and the bonds of Germany and Switzerland. Unemployment claims increased 7,000 in the previous week and nearly 90% of claimants are on the extended jobless benefits program.

Citigroup Inc led the decliners in the S&P 500 index with a loss of 7.2% after it completed the largest public offering of $20.5 billion. The offering of 5.4 billion shares at $3.15 each was below the U.S. Treasury purchase price of $3.25 a share. Conseco declined after it completed $214 million offering.

European banks declined after Basel based committee recommended higher capital requirements and tougher bonus and dividend standards at banks. Greek banks fell for the fourth day in a row. Deutsche Bank AG is in talks to buy commodities trading unit from Royal Bank of Scotland.

The UK banks declined after Basel, Switzerland based supervisory committee recommended banks to cut bonuses and dividend and improve the quality of capital on the books. UK retail sales declined 0.3% in November but gained 3.1% from a year ago. Court rules BA strike invalid.

Mumbai benchmark indexes trade volatile as banks decline and software exporters rise. Rupee edged lower. Exchanges delay their earlier opening hours as brokers and support staff protest. HCC and Pratibha Industries secure large construction orders.

National Australia Bank higher bid with cash was accepted by independent directors at AXA Asia Pacific Holdings for A$13.3 billion. The deal trumps the joint bid from AXA SA and AMP. Rio Tinto to sell iron ore to India.

North American Markets

Dow Jones Industrial Average decreased 132.86 or 1.3% to a close of 10,308.26, S&P 500 Index edged lower 13.10 or 1.2% to 1,096.08, and Nasdaq Composite Index decreased 26.86 or 1.2% to close at 2,180.05. Toronto TSX Composite Index declined 163.98 or 1.4% to 11,473.06.

Latin American Markets Indexes

Mexico Bolsa Index decreased 7.84 or 0.02% to 31,948.41 and Brazil Bovespa Stock Index fell 1,554.44 or 2.2% to 67,067.96.

Europe Markets Review

In London FTSE 100 Index closed lower 102.65 or 1.93% to 5,217.61, in Paris CAC 40 Index decreased 45.00 or 1.16% to close at 3,830.82, in Frankfurt DAX index lower 58.99 or 1.00% to close at 5,844.44. In Zurich trading SMI decreased 43.09 or 0.66% to close at 6,489.23.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 13.61 or 0.13% to 10,163.80, and Hang Seng index in Hong Kong decreased 264.11 or 1.22% to 21,347.63, and CSI 300 index in China lower 80.57 or 2.26% to 3,480.15. ASX 200 index in Australia increased 8.40 or 0.18% to 4,670.30. The FTSE Bursa KL Composite index in Malaysia was lower 2.06 or 0.16% to 1,266.97.

The Kospi Index in South Korea decreased 16.40 or 0.99% to close at 1,647.84. SET index in Thailand closed lower 0.20 or 0.03% to 715.81. JSE Index in Indonesia decreased 12.97 or 0.51% to 2,509.58. The Sensex index in India decreased 18.52 or 0.11% to 16,894.25.

Commodities, Metals, and Currencies

Crude oil increased $0.02 to $72.68 a barrel for a front month contract, natural gas edged up 28 cent to $5.74 per mBtu and gasoline decreased 2.67 cents to 184.72 cents.

Soybean future closed down 37.00 cents to $10.30 a bushel. Wheat futures closed down 18.75 cents in Chicago trading to $5.18 a bushel. Sugar closed higher 0.49 cent 26.43 cents.

Gold dropped $36.70 in New York trading to close at $1,099.00 per ounce, silver closed down $0.53 to $17.16 per ounce and copper for the front month delivery decreased 8.50 cent to $3.12 per pound.

Dollar closed higher against euro to $1.43 and edged higher against the Japanese yen to 89.94.

Yield on 10-year U.S. bonds decreased to 3.48% and with 30-year maturities closed lower at 4.42%.