Archive for November, 2009
NEW YORK (AFP) –
US stocks dropped in an abbreviated session Friday on concerns that Dubai's debt crisis could stall the global economic recovery from recession.
The Dow Jones Industrial Average fell 154.48 points (1.48 percent) to 10,309.92 as Wall Street returned from Thursday's Thanksgiving holiday.
All 30 Dow components ended in the red after the blue-chip index closed Wednesday at its highest level since October 2008.
The tech-heavy Nasdaq composite slid 37.61 points (1.73 percent) to 2,138.44 and the broad-market Standard & Poor's 500 retreated 19.14 points (1.72 percent) to 1,091.49.
"Dubai's request late Wednesday to delay debt payments rattled markets around the world and raised concerns that defaults may stall a global recovery," said Scott Marcouiller of Wells Fargo Advisors.
The Dow pared sharp opening losses of more than 200 points as investors digested news that Dubai World, the city state's flagship conglomerate, is seeking a six-month moratorium on repayment of 59 billion dollars in debts.
US financial markets had been closed Thursday as Asian and European markets tumbled on Dubai's debt announcement late Wednesday.
"Dubai World, the de facto sovereign fund for the desert nation, has essentially defaulted on a large part of its debt," said Douglas McIntyre of 24/7 .
The announcement "is sparking concerns about the financial health of the emerging markets and the impact on developed nations' exposure to the debt of Dubai, which surged as the region has gone through a massive construction boom in the past few years," Charles Schwab & Co. analysts said in a client note.
The Dubai grenade rocked Asian markets for a second day, with Hong Kong slumping almost five percent by the close. European markets rebounded in late trade from sharp opening losses as investors worldwide weighed the ripple effect of a possible debt default.
The dollar struck a 14-year low against the yen but was broadly higher against other currencies amid a flight from risk.
Wall Street volumes were light as many traders were absent for the session that closed at 1:00 pm (1800 GMT). No economic reports were released.
The banking sector took a hit, with the S&P banking index losing 2.57 percent.
Citigroup slid 2.64 percent to 4.06 dollars. Citi is reportedly the US bank most exposed to the United Arab Emirates, a federation of Abu Dhabi, Dubai and five other city states.
Bank of America fell 3.01 percent to 15.47 dollars, JPMorgan Chase slid 1.97 percent to 41.33 dollars and Goldman Sachs tumbled 2.82 percent to 164.16 dollars.
Oil heavyweights sank as oil prices shed more than two percent in New York. ExxonMobil fell 2.09 percent to 74.87 dollars and Chevron dropped 1.85 percent to 78.17 dollars.
The Dubai debt debacle overshadowed the typical post-Thanksgiving focus on the retail sector on Black Friday, the discount extravaganza that kicks off the year-end holiday shopping season.
Macy's fell 3.36 percent to 16.97 dollars, Wal-Mart slipped 0.60 percent to 54.63 dollars and lost 1.71 percent at 131.74 dollars.
MGM Mirage sank 4.09 percent to 10.56 dollars. The casino giant is opening CityCenter, a multi-billion-dollar joint venture with Dubai World, in December on the Las Vegas Strip.
Bonds firmed. The yield on the 10-year US Treasury bond dropped to 3.211 percent from 3.279 percent Wednesday and that on the 30-year bond fell to 4.209 percent from 4.238 percent.
Bond yields and prices move in opposite directions.
NEW YORK – The following stocks were among those that moved substantially or traded heavily Friday on the New York Stock Exchange and the Nasdaq Stock Market:
NYSE:
MGM Mirage, down 45 cents to $10.56 The casino operator's joint venture partner Dubai requested a debt payment delay. MGM said it wouldn't affect the Vegas development.
HSBC Holdings PLC, down $3.61 to $58.46 Goldman Sachs analysts said the London bank could face losses of $611 million if Dubai World defaults on its debt.
Halliburton Co., down $1.12 to $29.09 The tumbling price of crude amid jitters over a Dubai investment fund's debt crisis hurt shares of the oilfield services provider.
Satyam Computer Services Ltd., down 35 cents to $4.30 Earlier this week, Indian investigators said fraud at the software services firm was at least $1 billion more than initially thought.
Macy's Inc., down 59 cents to $16.97 Shares of the department store dropped amid a broader market slump on "Black Friday," the traditional open to the holiday shopping season.
ING Groep NV, down $2.44 to $9.84 The Dutch bank priced a 1.8 million rights issue, set to raise $11.2 billion, at a 37.3 percent discount to its stock price.
Ivanhoe Mines Ltd., down 93 cents to $11.84
The gold miner's shares fell as the price of the precious metal slipped following a 10-day climb.
NASDAQ:
Activision Blizzard Inc., up 2 cents to $11.58 The video game maker said it had sold more than $3 billion worth, or 55 million units, of its "Call of Duty" franchise.
A look at economic developments and activity in major stock markets around the world Friday:
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DUBAI, United Arab Emirates — Debt-burdened Dubai insisted that it took into account market fallout from its appeal to delay paying creditors, but offered no specifics and did little to ease worries that dragged down global markets for a second day.
Sheik Ahmed bin Saeed Al Maktoum, the chairman of Dubai's Supreme Fiscal Committee, stressed that the call to defer for at least six months at least some of $60 billion owed to creditors by Dubai World, the emirate's chief investment arm, was "carefully planned" and aimed at taking decisive action.
But the announcement appeared to reinforce worries that Dubai's rulers are fueling a crisis of confidence from world markets with their policies of keeping tight control over information on their fiscal standing and deal making. The timing of the announcement worsened the concerns, since it came ahead of a three-day Islamic holiday.
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TOKYO — Japan prices fell again in October, just as a surging yen threatens to worsen the deflation that is undermining the country's fragile economy.
The core consumer price index, which excludes volatile fresh food, retreated at a near-record pace of 2.2 percent from a year earlier, the government said. Prices have now fallen for eight straight months — a trend that the government highlighted last week for the first time in three years.
The news came amid heightened concern over the Japanese currency, which hit a new 14-year high against the dollar.
A strong yen and deflation represent a perilous combination for the world's second-biggest economy.
The yen weakened after Japan's finance minister Hirohisa Fujii called the yen's surge "a very serious situation" and added that Tokyo will take appropriate measures as needed, even suggesting that Japan may cooperate with the U.S. and Europe to calm foreign exchange markets.
In Asian trading, Hong Kong's Hang Seng closed 4.8 percent lower, while South Korea's benchmark plummeted 4.7 percent, Japan's Nikkei 225 stock average fell 3.2 percent, Australia's index dropped 2.9 percent and China's main Shanghai stock measure was off 2.4 percent.
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BEIJING — Chinese leaders pledged to stick to stimulus spending and easy credit to support growth next year, making clear their unease about the stability of China's nascent recovery from the global crisis.
Ending a closely watched annual planning meeting, the Communist Party leadership gave no sign it planned an early exit from the stimulus despite a recent upturn in growth. But it said stimulus efforts will shift emphasis from state-led investment to encouraging more consumer spending and private investment.
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LONDON — Economic conditions in the 16 countries that use the euro improved further in November amid mounting optimism in the industrial sector.
In its monthly assessment of economic conditions, the European Commission said its main economic sentiment indicator for the eurozone rose for the eighth month running to a 14-month high of 88.8 points, up 2.7 points from the previous month.
For the 27-nation EU as a whole, which includes non-euro members such as Britain and Sweden, the economic sentiment indicator increased 1.9 points to 87.9.
In European markets, the FTSE 100 index of leading British shares closed up 1 percent, Germany's DAX rose 1.3 percent and the CAC-40 in France ended 1.2 percent.
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GENEVA — The United States, China and other commercial powers will spearhead a new attempt next week to find ways to revive world trade and drag the global economy out of recession.
The World Trade Organization has called trade chiefs from its 153 members to Geneva for the first ministerial conference in four years, at a time when global exports are falling rapidly and the WTO's long-sought Doha liberalization round is limping into its ninth year.
Instead of sensitive tariff and subsidy negotiations, the conference running Monday through Wednesday will focus on the big picture — stabilizing and rejuvenating commerce in the face of increased protectionism, unemployment and exporting of jobs.
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MADRID — Spain unveiled an ambitious reform package aimed at weaning its troubled economy off the construction sector and nudging it toward a more sustainable growth model.
The 10-year plan features everything from tighter supervision of the financial sector — and forcing listed companies to tell shareholders how much their executives earn — to measures making it easier for Spaniards to start up small businesses.
Spain, once among Europe's largest creators of jobs and boasting more than a decade of solid GDP growth, is now suffering its worst recession in decades.
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HARARE, Zimbabwe — Zimbabwe signed a trade deal with neighboring South Africa to help kick-start Zimbabwe's collapsed economy.
The agreement is aimed at unlocking millions of dollars worth of investment by companies in South Africa, the continent's economic powerhouse.
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STOCKHOLM — Sweden's economic activity slumped by an annual 5 percent in the third quarter, mainly due to a larger-than-expected drop in business inventories.
Compared with the second quarter however, Statistics Sweden said the country's gross domestic product grew by 0.2 percent.