Dow Down 5% in 3-days; Bernanke Opposition

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

Investors fear banks may face uncertain future as lawmakers prepare to draft more regulation for the industry. Fed Chairman Bernanke nomination faces growing opposition as voters blame his policies of the past contributing to the housing market and economic malaise.

[R]4:00 PM New York, 9:00 PM London, 8:00 AM Sydney – Investors fear banks may face uncertain future as lawmakers prepare to draft more regulation for the industry. Fed Chairman Bernanke nomination faces growing opposition as voters blame his policies of the past contributing to the housing market and economic malaise.[/R]

Banks, Bernanke and China were the focus of trading in New York today.

The proposal from the U.S. President Obama is gaining support among lawmakers as voters believe that people who caused the current economic decline are the one benefitting from the recent market gains.

Fed Chairman Bernanke’s nomination is swept in populous anger and the U.S. Senators appear reluctant to vote in favor. Bernanke’s proclamations in the past have turned out to be quite contrary to the economic realities. He had said that banks are adequately capitalized, sub-prime loans are very small portions of the housing loans and Fannie and Freddie have no problems with their capital adequacies. His support of low interest rates in the last six years also has contributed to the housing market speculation and its collapse later.

Prospects of higher rates in China, India, Korea and Australia prompted fresh worries on global growth. President Obama’s plan to limit risk taking at banks dragged financial stocks lower. Commodities declined on tighter monetary conditions in Asia. Google, AMD fall and McDonald’s rises on earnings.

American Express and Capital One Finance declined more than 8% after investors fear additional regulations for credit card loans. General Electric reported 19% drop in earnings but said prospects looks brighter for the current year.

Markets in Europe traded lower and in Asia declined sharply. Gold, copper and crude oil also fell after a surge in Chinese GDP stoked speculation of tighter monetary policies. Industrial orders in the euro-zone increased and UK retail sales in December less than expected.

Investors worried that additional bank regulations and limits on risk ventures is likely to curb future profits at banks. Bwin Interactive is in merger talks with PartyGaming.

UK financials and miners led the decliners for the third day in a row. The benchmark index is in loss for 2010. Miners fell on the worries that China will tighten monetary policy and banks declined on limit on risk taking activities in the U.S. may spread to Europe.

Stocks in Shanghai and in Hong Kong fell for the week. Resource stocks declined after commodities prices fell on the worries that tighter lending will slow construction industry in the mainland. Chalco 2009 revenue nears $21 billion. Sands China Ltd starts the road show to raise $1.75 billion.

Japan supermarket sales fall 5% to 1.2 trillion yen in December and annual sales declined for the thirteenth year in a row. Toyota Motor Corp. recalls 2.3 million cars to fix sudden acceleration.

Investors in India sold stocks ahead of the RBI meeting. Reliance increased its share of sales in the domestic market and quarterly revenues surged 80%. Bharti Airtel sales rise 1.4%. Discount carrier SpiceJet swings to a profit. Corporation Bank net surges 19%.

Australian stocks closed sharply lower on the worries that mining companies may be asked to pay more taxes on future projects. The leaked report raised new uncertainties on the taxation regime. Lower world prices of metals and energy also weighed on the market sentiment.

North American Markets

Dow Jones Industrial Average decreased 216.90 or 2.1% to a close of 10,172.98, S&P 500 Index edged lower 24.72 or 2.2% to 1,091.75, and Nasdaq Composite Index decreased 60.41 or 2.7% to close at 2,205.29. Toronto TSX Composite Index decreased 125.67 or 1.1% to 11,343.43.

Latin American Markets Indexes

Mexico Bolsa Index decreased 374.39 or 1.2% to 30,830.91 and Brazil Bovespa Stock Index fell 50.10 or 0.08% to 66,220.04.

Europe Markets Review

In London FTSE 100 Index closed lower 32.11 or 0.60% to 5,302.99, in Paris CAC 40 Index decreased 41.38 or 1.07% to close at 3,820.78, in Frankfurt DAX index lower 51.65 or 0.90% to close at 5,695.32. In Zurich trading SMI decreased 84.99 or 1.29% to close at 6,493.96.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 277.86 or 2.56% to 10,590.55, and Hang Seng index in Hong Kong decreased 136.49 or 0.65% to 20,762.18, and CSI 300 index in China lower 42.38 or 1.24% to 3,366.20. ASX 200 index in Australia decreased 76.60 or 1.59% to 4,750.60. The FTSE Bursa KL Composite index in Malaysia was lower 7.91 or 0.60% to 1,300.45.

The Kospi Index in South Korea decreased 37.66 or 2.19% to close at 1,684.35. SET index in Thailand closed lower 4.89 or 0.68% to 714.10. JSE Index in Indonesia decreased 28.04 or 1.06% to 2,610.34. The Sensex index in India decreased 191.46 or 1.12% to 16,859.68.

Commodities, Metals, and Currencies

Crude oil decreased $1.93 to $74.15 a barrel for a front month contract, natural gas edged up 18 cents to $5.80 per mBtu and gasoline decreased 2.29 cents to 196.00 cents.

Soybean future closed down 2.50 cents to $9.51 a bushel. Wheat futures closed down 1.00 cents in Chicago trading to $4.98 a bushel. Sugar closed up 0.13 cents at 28.78 cents.

Gold decreased $9.60 in New York trading to close at $1,093.60 per ounce, silver closed down $0.45 to $17.06 per ounce and copper for the front month delivery increased 5.4 cent to $3.34 per pound.

Dollar closed lower against euro to $1.4136 and edged lower against the Japanese yen to 89.85.

Yield on 10-year U.S. bonds decreased to 3.60% and with 30-year maturities closed lower at 4.52%.