nationalized most of major banks in the economy saying that those stocks will eventually be dumped by the government by the time the situations improves.
Various attempts took place, the prior US government had bailed out a majority of the banks, but they failed in restoring confidence in financial markets which resulted in more than 40% losses to major indices which managed to diffuse to the current year.
Where Dow Jones industrial average fell 1.28% or 105.30 points reaching 8122.80 levels leaving the index with 7.45% losses since the beginning of the year, S&P 500 which contains most financial companies had faced a total of 8.39% since the beginning of the year where yesterday the index fell 1.52% or 12.74 points closing at 827.50 levels. Also NASDAQ had followed those losses where yesterday the index closed at 1465.49 levels falling 2.76%.
Interventions will continue, last night Treasury Secretary nominee came out to ask for a prolonged intervention by the government in order to spread back some tranquility in markets; where Geithner is now working with the US President Barack Obama in order to activate the left over money from the $700 billion bailout plan to stop the continuous fallouts in their economy.
Lack of tranquility in markets had crippled majors; the British pound fell yesterday to the lowest in 23 years, where it managed today to inch higher slightly to currently trade at 1.3753 levels, the weakness against the US dollar continued the sixteen nation currency plunged to trade at 1.2933 levels; investors shifted their attention from the higher yielding assets to low yielding ones such as the Japanese yen, where the USD/JPY is currently trading at 88.56 levels.
The pessimism from the continuous losses in the financial sector and the manufacturing sectors had also managed to diffuse in the Asian markets, the Japanese Nikkei index fell 3.81% or 306.49 points reaching 7745.25 levels, besides the Hang Seng Index which lost 0.11% or 14.32 points reaching 12643.67 levels.
The Britons are waiting to see the GDP reading which will be released later today, markets project a deeper contraction in the fourth quarter where it might be reaching to -1.2% coming worse than the previous contraction of 0.6% which took place in the third quarter. The yearly GDP will dip down to -1.4% from the previous expansion of 0.3%.
The prolonged Credit Crisis that diffused into the Royal Kingdom had crippled growth badly, no more domestic or international demand leaving the Kingdom without any support. The lost confidence had continued to weaken growth levels, where retail sales in December which is considered to be one of the main months of the year where earnings surge higher, but this time markets foresee a contraction in sales by 0.7% on the month but holding still at 1.5% on the year.
Due to the endless destruction taking place in the Kingdom, the Bank of England decided earlier this week to intervene by buying a larger stake in the nationalized Bank of Scotland reaching to 70%, besides to 100 billion dollars which will be used to cushion the financial sector.
With today GDP comes into an official contraction the United Kingdom will fall under the technical definition of recession, as they would be joining the other European economies such as Germany, Italy and Spain where they faced two consecutive contractions.
Also we are waiting for euro area's PMI Manufacturing, which according to markets projections we would be seeing the eighth contraction in a row in the manufacturing sector, the PMI manufacturing will contract to 33.1 levels from the previous 33.9 alongside with the services PMI reading which will contract to 41.5 levels from the previous 42.1.
So my dear reader today we will see to what levels the United Kingdom growth contracted, as this would be the first recession since 1991!