Current Futures: Dow +87.00, S&P +10.40, NASDAQ +16.25
European Trade: European equity markets opened higher for the first time in the last five days, inline with the Asian markets and the U.S. futures. The financials continued to advance in the overnight market, helping the major indexes retrace some the declines seen in the last few days.
RBS, the U.K. bank that has recently been nationalized, posted a record loss for 2008. The bank lost 24.1 billion pounds last year, compared with a 7.3 billion pound profit just one year earlier. In addition, RBS announced it will drop 325 billion pounds, or $462 billion, in an insurance scheme run by the U.K. government. The bank is looking to insure much more than expected, since, in the last few days, the news agencies speculated the bank would unload about 250 billion pounds of toxic assets.
For this to happen, RBS will have to pay a 6.5 billion pound fee, or 2% of the toxic assets’ value, take the first 19.5 billion of losses, or the first 6% drop, and support 10% of any other losses that the toxic assets suffer. Tomorrow, two other major U.K. banks are expected to announce that they will join the insurance scheme. Shortly after the announcement, RBS surged 25%.
Today, the European Union regulators announced that they do not have a position concerning a European rescue package for the auto-industry, but they will announce, shortly, their stance for the bailout plans proposed by individual countries. According to the European Union treaty, individual countries do not have the right to offer direct assistance to any privately owned company, in order to avoid unfair competition.
Tonight, the Nikkei fell 3.29 points (0.04%) to 7,457.93. The Australian S&P gained 18.00 points (0.54%) to 3,345.50. The U.K. Ftse added 62.46 points (1.62%) to 3,911.44, while the German Dax rose 56.71 points (1.47%) to 3,902.92
Crude oil was trading near the highest value in a month. Crude oil for March delivery gained $0.25 to $42.85
Gold declined again, as some say the economy will eventually recover. Bullion for immediate delivery fell $12.40 to $953.80.