Where do we turn when we’re worried about the economy? Google, it seems, whose business is booming and when it turned in a better than expected quarterly profits report, and said it would curb spending although it has just hired 500 people, its share rose 10% in an otherwise gloomy market Thursday. Reuters
Japan’s Nikkei was up 14 points, a one-day record gain, and European stocks appeared set to repeat Monday’s strong gains, with the largest gain at “Societe Generale SA [which] rallied 13 percent after posting a profit and saying it doesn’t need additional capital. Oil headed for its biggest two-day advance in three weeks” (Bloomberg) as financial markets around the world begin to react positively to more government intervention, ahead of the US pumping $250 billion into nine banks. CNN, Financial Times
Zurich, Switzerland (GenevaLunch) - The Swiss National Bank announced Monday morning that starting 15 October it will be holding US dollar auctions every Wednesday, a move coordinated with those of four other central banks to improve liquidity in global markets.
Zurich, Switzerland (TSR, Fre) - The Swiss stock market slid further Friday, as did others throughout Europe. Swiss shares were down 8% at one point and at 11:30 were at 6% lower.
Too little, too late, appears to be the reaction in Asian stock markets to efforts by governments to free credit, and shares plunged during Friday trading, with the Nikkei in Japan down 10% after news that Wall Street saw the Dow Jones drop by 7.6% Thursday. Reuters
Asian markets fell sharply in trading Wednesday, reacting to the 508-piont drop Tuesday in the US Dow Jones, despite the US Federal Reserve signalling that it will likely announce a cut in interest rates. Al Jazeera
Australia cut its interest rates far more than expected, by 100 basis points, in a surprise move that cheered Asian markets, which had fallen sharply Monday. The move provided some cheer after a day where the FTSE in London had its largest-ever one-day drop in share prices and the Dow Jones in New York closed down 3.5%. Reuters
Monday morning in the ever-tense financial world began with the news that over the weekend three European governments had decided to offer blanket guarantees on savings; meanwhile in Asia shares fell as the markets opened for the first time after the vote in the US Congress to back a $700 financial package to help ease liquidity (Reuters) and in Europe shares fell badly when markets opened (Financial Times).
The Dow Jones inex had its largest one-day fall in history, losing 7% of its value Monday, and stock markets in Asia fell sharply Tuesday after Monday’s rejection by the US Congress of a government package to help the financial industry: both Tokyo’s Nikkei and Hong Kong’s Hang Seng dropped about 5% within the first 10 minutes of trading, but rallied somewhat later. In Australia shares were down 2.2% by late Tuesday afternoon, after coming back from an earlier big drop. BBC, Bloomberg, Sydney Morning Herald
The financial world continues to grab headlines with two European groups bailed out over the weekend: Fortis, Belgium’s largest insurance company, was saved with an €11.2 billion package from The Netherlands, Belgium and Luxembourg, although the ripple effect of losses at Fortis are reaching the Hong Kong stock market, with shares in Ping An, China’s second largest insurance company with a stake in Fortis, falling by more than 9%. Bloomberg In the UK, lender Bradford & Bingley’s mortgage business has been nationalized and its savings business bought by Spanish Santander bank’s subsidiary Abbey. BBC
The stalemate in the US Congress over the aid package for the financial industry, coupled with the bankruptcy of Washington Mutual Bank, has sent shock waves through stock markets, especially bank shares. HSBC Holdings, Europe’s largest bank, announced that it is cutting 1,000 jobs because of the impact of the crisis. Reuters
Thursday was a rough day in the US financial industry: the federal government took over Washington Mutual in the biggest bank bailout in the country’s history, then sold parts of its business to JP Morgan in the same day (International Herald Tribune), and late Thursday the delicate negotiations in Congress over a financial industry rescue package stalled, as political squabbling took over (CNN). Financial Times
Markets around the world reacted positively to the news that Warren Buffett’s Berkshire Hathaway investment firm is buying a $5 billion stake in Goldman Sachs.Reuters The deal gives him an “instant paper profit of $435 million,” reports Bloomberg.
The price of oil jumped dramatically Monday and the dollar lost 2% against main currencies as worries around the world surfaced over the $700 bn US government plan to rescue financial markets. Financial Times
The US Federal Reserve will regulate Goldman Sachs and Morgan Stanley in the future, which have applied to become holding companies, requiring capital reserves as the Fed does for US banks. Their applications go into effect after a five-day waiting period and “spells the end of the investment banking industry as a separate sector, leaving behind only small boutique securities firms. In doing so it ends the decades old division of the US financial industry into two halves, which dates back to legislation passed after the Great Depression,” writes Krishna Guha in the Financial Times, International Herald Tribune
Wall Street ended Thursday with its largest one-day percentage gain in six years after the US government “proposed a taxpayer-funded mopping up of toxic mortgage-related debt,” writes Reuters. The rally was quick and “powerful” and Asian markets also rebounded early Friday, with oil prices and the dollar rising on the news, helped by the UK banning short selling of bank stocks (The Times, UK). The UK is considering doing the same, reports the Financial Times.
Zurich, Switzerland (GenevaLunch) - The Swiss National Bank Thursday joined the European Central Bank and the Bank of England in trying to prop up world markets by with “the central banks’ first-ever loans of overnight dollar liquidity,” reports Reuters.
The financial crisis for big banks continues, with Lloyds TSB buying HBOS, Britain’s largest mortgage lender, which lost half its value last week, for £12 billion. Bloomberg Asian markets continue to fall with Hong Kong down 7.7% at one point Thursday. Financial Times
The world financial markets were extraordinarily busy Tuesday, trying to keep up with events: the US government agreed to loan insurance giant AIG $85 billion (New York Times) but at a hefty 8% interest rate that will push the company to rapidly sell assets (Reuters), Asian markets bounced back on the news after being hit hard Monday by Wall Street’s crises. They were also shored up by Japan’s and Australia’s central banks injecting US$33 billion (Financial Times).
