Current Futures: Dow -24.00, S&P -2.80, NASDAQ -2.50
European Trade: European equity markets opened higher, led by the financials. The same financials helped the Asian and the U.S. markets close higher for the first time in the last few days, and bounced from multi-year bottoms. It turns out that U.S. banks have the necessary capital for now, despite rumors to the contrary in the last days.
The financial were lifted worldwide after Mr. Bernanke said that the U.S. government does not plan to control any bank through nationalization, and after the FDIC Chairman declared that banks have the appropriate capital. In the overnight market, the U.S. futures traded mixed.
The Tokyo Stock Exchange was affected by a computer glitch, again. The Japanese unit of UBS mistakenly placed an order of 3 trillion yen, or $31 billion, for Capcom convertible bonds. However, this was an off the market trade, so it had a very small influence in the market price. Later in the day, the trade was canceled.
This is not the first time that the TSE has had to confront such a situation. During the summer months, a computer failure forced the Topix futures market to close for half a day. The most well known computer error on the TSE system happened in 2005, when an institutional trader mistakenly inserted a sell order of 610,000 J-Com shares at the price of 1 yen, instead of selling 1 share for 610,000 yen. This trade was not able to be canceled or reversed.
A report this morning revealed that Merrill Lynch, now a subsidiary of Bank of America, reported a larger than expected loss in the fourth quarter. The bank lost $15.84 billion in Q4, 500 million more than expected, from which $2.3 billion came from write-downs. Yesterday, Bank of America gained 20.97%, after Mr. Bernanke suggested that banks might not need to be nationalized.
The Nikkei rose 192.66 points (2.65%) to 7,461.22. The Australian S&P fell 4.10 points (0.12%) to 3,327.50. The U.K. Ftse gained 43.55 points (1.14%) to 3,859.99, while the German Dax added 47.53 points (1.22%) to 3,943.28.
Crude oil dropped tonight as the economy is set to slow even more. Crude oil for March delivery fell $0.10 to $39.85
Gold extended the decline seen in the last few sessions of trading. Bullion for immediate delivery fell $14.70 to $954.80.