Current Futures: Dow -125.00, S&P -14.00, NASDAQ -19.50
European Trade: European markets plunged soon after the opening bell, as the credit crunch seems to be having a stronger effect on the real economy than previously thought. During the European session, the U.S. futures started to move lower at a fast rate.
The market has been hit very hard in the latest few sessions by rumors that the U.S. government will nationalize Bank of America and Citigroup. In additional, European markets was hurt by GM’s decision to scrap SAAB sending the major indexes lower. The Swedish car-manufacturer will now have to re-organize under its own entity, most likely helped by local authorities.
As the financial sector trades near a 17-year low, two important swing points gave way recently. First, the Dow Jones, which closed below the low made in November, of 7500 points. The market bottomed at the same value in 2002, when the U.S. economy was fighting the Tech bubble, and in 1998, during the LTCM bankruptcy together with the Asian default crisis. Even worse, U.S. futures pointed to a weak start on Wall Street, meaning to Dow could head much lower.
Soon after, the Japanese Topix reached a whopping 25-year low, indicating the poor state of the economy. Topix is a weighted index that tracks the performances of all the listed companies in the First Section of the Tokyo Stock Exchange. It is worth noting that, the Japanese Nikkei was valued at 37,000 points in 1990, and now its value has dropped to 7,500. Japan has had to fight a bubble similar to the U.S.’s bubble in the early 90’s, from which the economy never recovered.
Tonight, the MSCI Asian Pacific Index fell 2.3%. The index is down 15% this year, on top of the 43% decline seen last year. The Nikkei fell 141.27 points (1.87%) to 7,416.38 The Australian S&P slid 46.50 points (1.35%) to 3,402.40. The U.K. Ftse declined 88.37 points (2.20%) to 3,930.00, while the German Dax slumped 100.76 points (2.39%) to 4,114.45.
Crude oil moved lower in the Asian session, even though OPEC threatened to cut production. Crude oil for March delivery fell $0.75 to $38.70
Gold decline tonight, after strong gains in the last two days. Bullion for immediate delivery slipped $1.80 to $974.70.