Asian trade: Asian markets continue to head lower, as the main factor of output growth, foreign demand, tumbles, leaving the region without its export market. U.S. futures also traded lower, having the S&P fell 12 points, or 1.60%.
Commodity stocks were again the “stars” of the session, recording the biggest declines. These companies are very sensitive to the global demand and every small change in the business cycle affects them directly. The huge declines seen in the last months in the raw material market have a negative effect on the commodity stocks, affecting the company’s profit.
Insurance companies also saw some rather strong declines, as investors raise questions about their capital reserves. A strong capital reserve is a very important feature for a financial company, being directly linked to its ability of surviving tough periods. Due to the credit crunch, raising new capital is very expensive right now, and could be too much to handle by some companies, as the last months proved.
Up to now, the Asian stocks declined an average of 10% this year, adding to the 43% decline seen in 2008. Tonight, the Nikkei fell 112.68 points (1.45%) to 7,637.50. The Australian S&P lost 49.90 points (1.42%) to 3,467.00.
Crude oil trades near the lowest value touched in the last few weeks. Crude oil for March delivery fell $0.60 to $36.80.
Gold continues to head higher, as investors use it as a safe haven. Bullion for immediate delivery rose $3.00 to $945.20.