U.S., World Indexes Down 2%; Obama Bank Plan

123jump.com Staff
21 Jan, 2010
New York City

President Obama proposed a plan that will limit excessive risk taking by banks with depositors capital and banks are not too big that require a government bailout. Indexes in the New York, Toronto, Mexico City, Sao Paolo and Europe fell between 2% and 2.8%. Gold, copper and crude oil declined.

[R]4:00 PM New York, 9:00 PM London, 8:00 AM Sydney – President Obama proposed a plan that will limit excessive risk taking by banks with depositors capital and banks are not too big that require a government bailout. Indexes in the New York, Toronto, Mexico City, Sao Paolo and Europe fell between 2% and 2.8%. Gold, copper and crude oil declined.[/R]

U.S. stocks traded lower after weekly jobless claims increased in the last week. President Obama proposed that banks should not be allowed to take excessive risks with their capital including running hedge funds and structured investments and proprietary trading. The limit on risk taking proposal led to a widespread selloff in banking stocks and broader indexes in the Americas and Europe.

Goldman Sachs quarterly net surged to $4.95 billion. Quarterly sales at Starbucks increased 4% and at eBay surged 16%.

Goldman Sachs quarterly and annual earnings exceeded estimates and said it will payout $16 billion in bonuses. Estee Lauder, Seagate Technology, Starbucks and Xerox Corp increased after reporting better than expected earnings. eBay surged after it offered annual earnings outlook.

World indexes traded mixed after China reported a surge in its latest quarterly economic expansion. European composite index of manufacturing and services showed a slower growth in January. The euro declined 0.4% and Greek bonds rebounded.

The UK budget deficit surged in December to a record £119.9 billion and net debt soared to £870 billion or 61.7% of gross domestic product. Stocks in London trading fell after miners and banks led the decliners. Enterprise Inns surged 20% after profit decline slowed.

European markets declined nearly 2% for the second time this week and erased the gains of the year. Banks led the decliners after the U.S. proposed limiting risk taking activities by banks. Euro was under pressure as a measure of economic growth softened.

Markets in Asia and Europe were on the defensive after China reported fourth quarter economic expansion of 10.7%. In 2009, economy grew at a rate of 8.7%, above 8% target rate. Metal prices fell in London trading on the worries that China will issue more measures to tighten lending.

Stocks in Hong Kong and Shanghai dropped sharply after China reported fourth quarter economic expansion of 10.7%. Resource, auto makers, realtors and banks led the decliners. Copper production surged and crude oil production increased in 2009.

Stocks in Japan closed higher after the yen weakened. Japanese electronics makers increase after Korean chipmaker Hynix swings to a profit. Insurance companies closed higher after casualty insurers expand in China.

The Sensex index in India dropped 2.4% after wholesale inflation index surged and Larsen & Toubro lowered its sales outlook. Reserve Bank of India may be forced to increase rate at its meeting on Jan 29. Rupee declined. Kotak Mahindra quarterly net surges 153%.

Stocks and commodities in Sydney trading declined after China reported a surge in economic expansion. The Australian dollar strengthened. New Zealand retail sales increased 0.8%. CBH Resources surged 15% after it struck a deal with Toho Zinc Co.

North American Markets

Dow Jones Industrial Average decreased 213.27 or 2% to a close of 10,389.88, S&P 500 Index edged lower 21.56 or 1.9% to 1,116.48, and Nasdaq Composite Index decreased 25.55 or 1.1% to close at 2,265.70. Toronto TSX Composite Index decreased 210.22 or 1.8% to 11,469.10.

Latin American Markets Indexes

Mexico Bolsa Index decreased 820.04 or 2.6% to 31,205.30 and Brazil Bovespa Stock Index fell 1,929.93 or 2.8% to 66,270.14.

Europe Markets Review

In London FTSE 100 Index closed lower 85.70 or 1.58% to 5,335.10, in Paris CAC 40 Index decreased 66.79 or 1.70% to close at 3,862.16, in Frankfurt DAX index lower 104.56 or 1.79% to close at 5,746.97. In Zurich trading SMI decreased 7.58 or 0.12% to close at 6,578.95.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 130.89 or 1.22% to 10,868.41, and Hang Seng index in Hong Kong decreased 423.50 or 1.99% to 20,862.67, and CSI 300 index in China higher 14.14 or 0.42% to 3,408.57. ASX 200 index in Australia decreased 41.00 or 0.84% to 4,827.20. The FTSE Bursa KL Composite index in Malaysia was higher 1.74 or 0.13% to 1,308.36.

The Kospi Index in South Korea increased 7.63 or 0.45% to close at 1,722.01. SET index in Thailand closed lower 12.81 or 1.75% to 718.99. JSE Index in Indonesia decreased 28.88 or 1.08% to 2,638.38. The Sensex index in India decreased 423.35 or 2.42% to 17,051.14.

Commodities, Metals, and Currencies

Crude oil decreased $1.7 to $76.00 a barrel for a front month contract, natural gas edged up 14 cents to $5.50 per mBtu and gasoline decreased 6.25 cents to 198.40 cents.

Soybean future closed up 4.00 cents to $9.54 a bushel. Wheat futures closed up 2.00 cents in Chicago trading to $4.99 a bushel. Sugar closed up 0.15 cents at 29.26 cents.

Gold decreased $18.80 in New York trading to close at $1,093.80 per ounce, silver closed down $0.49 to $17.39 per ounce and copper for the front month delivery decreased 5.5 cent to $3.30 per pound.

Dollar closed higher against euro to $1.408 and edged higher against the Japanese yen to 90.49. The euro fell to a new low in the last three months.

Yield on 10-year U.S. bonds decreased to 3.59% and with 30-year maturities closed lower at 4.50%.