Asian markets opened slightly below the break-even level, while the U.S. futures also moved lower tonight. It appears the markets turned into the red after the current administration commented about the banking system.
Mr. Obama said tonight that banks that will require additional funds from taxpayers and they will in turn have to provide more clarity and accountability. This comes after the last few months of the government being accused of writing blank cheques to the financial system.
“The market fears that the government will try to impose special conditions if more banks ask for additional funding, which means they have been left with few choices,” TheLFB-Forex.com Trade Team notes. “Also in the past weeks, top government officials have said that bank CEO’s might be forced to leave their position if the financial institute asks for more funds,” they added. “Knowing that most executives will not want to leave their post in exchange for more government funding, most execs are exhausting all other options in order to avoid a deal with the government”
“The main problem might be that the government tries to implement these decisions too soon, affecting the weak balance of the financials. To some extent, this might also explain the rush on the banking system to repay the Treasury loans ahead of schedule. At this point, the last thing the government will want to do at this critical time is too put pressure on the bank’s balance sheets,” TheLFB-Forex.com said.
Overnight, the Nikkei fell 77.72 points (0.87%) to 8,929.86. The Australian S&P/Asx declined 29.00 points (0.77%) to 3,747.70.
Crude oil for May delivery was recently trading at $50.10 per barrel, down by $0.20.
Gold for May delivery was recently trading down by $1.60 to $866.30.