Banks Remain under pressure on Credit Market Turmoil (15-02-2008)

Wall Street retreated during Thursday’s session as investors begin to realize the severity of the credit situation after failure of several auctions for municipal bonds, while Fed Chairman Ben Bernanke testifying before the Senate banking committee acknowledged the outlook for the economy had worsened in recent months and said risks to growth had picked up. The Dow Jones lost almost all the points gained in the previous session.

Asian Markets were also hit, with Japan going a long way to reverse the previous session’s impressive gains, but paring losses in the end to finish practically flat. Banks were leading losses with Mitsubishi UFJ losing 1.67%, Sumitomo down 2.1% and Mizuho retreating by 0.68%. The Bank of Japan unanimously voted to keep the interest rate at 0.5% as last years sentiment of the possibility of higher interest rates quashed to the extent that some believe rates will be slashed again this year.

Still in the region, financials were under pressure also in Australia, where the Macquarie lost 5%, in Hong Kong, where HSBC Holdings lost 2.2%, and Seoul, Korea, where the Exchange Bank plunged by 5.2%.

European stock markets that had been rising buoyed by mining and chemical company stocks, turned down by midday as the burden of troubled French banks took its toll. Natixis investment bank plunged by 13.2 percent after unveiling more than 1 billion euros write-downs linked to the credit crisis, BNP Paribas was down by 2.3% and Credit Agricole shed 3.8 percent.

Futures for U.S. markets on Friday were moving sideways as the trading day’s economic data releases culminate with the preliminary University of Michigan sentiment for February and the stake of 8.6% in Kraft foods by Warren Buffett's Berkshire Hathaway has pushed the company’s share price up in Frankfurt.

Source: ISFM