After the opening of a very bad omen and a brief recovery, the U.S. markets back into the red.
New meeting difficult on Wall Street. The Dow Jones lost more than 6% at the opening, rising briefly in the 8000 points. The Nasdaq, which tech stocks meanwhile fell more than 4% at the same time. The index briefly regained balance to 16.15, before returning in the red. The Dow lost more than 4% to 17.30, the Nasdaq sells more than 3%.
Rumors rife on bank Morgan Stanley, seen as the next potential victim of the crisis, collapsed Friday after having dropped 25% yesterday. General Motors, which fell 31% yesterday after a warning from Standard & Poor's on its debt, is recovering slowly. Traders are concerned about the impact of financial crisis on the real economy. The banking crisis and credit could ultimately affect companies seeking funds to invest. The Dow Jones has already lost almost 20% over the last five days.
Recent economic statistics are grim about the health of the U.S. economy and labor market. Moreover, according to the Wall Street Journal, the 52 economists surveyed by the newspaper, believe that the economy went into recession (negative growth for two quarters in a row) in the third quarter and should remain there until the first quarter of 2009. 89% of economists surveyed foresee a recession in the next 12 months, against 60% a month ago.
Towards a comprehensive solution?
The eyes are now riveted to Washington today to meet finance ministers and central bankers of the G7 (Canada, USA, France, Italy, Japan and the United Kingdom). They will try to find solutions to address the financial crisis. Japanese Prime Minister Taro Aso said that Japan, which chairs the G8 this year, is ready to convene a special summit if no solution emerges from the G7 meeting.
Traders seem to expect a solution of countries, not isolation. So far, the various measures taken by governments and central banks (injection of liquidity, concerted rate cuts, partial nationalization, deposit guarantee) did not reassured operators to run. According to the Wall Street Journal on its website, the United States consider temporarily guarantee all bank deposits and debts of banks. Yesterday, the New York Times, which quoted members of the administration, indicated that the Treasury Department was considering taking stakes in U.S. banks. U.S. Treasury Secretary Henry Paulson did not want to say whether the administration had come to the capital of institutions. He only indicated that the rescue plan for banks gave him that opportunity. Pending a better visibility on measures to be taken by the authorities, is prudence, even panic prevailed.
On the macroeconomic front, the U.S. trade deficit fell in August by 3.5% from July to 59.1 billion dollars, according to figures adjusted for seasonal variations. This figure is in line with analysts' expectations. For the month of July, the deficit amounted to 61.3 billion dollars against 62.2 billion initially announced. Exports fell 2% to 164.7 billion dollars and imports by 2.4% to 223.9 billion dollars.
Yesterday, the Dow Jones fell by 7.33% to 8579 points and the Nasdaq Composite fell by 5.47% to 1645 points.
Values to follow
Citigroup has ceased discussions with Wells Fargo about a possible division of Wachovia. It will claim up to 60 billion dollars to two banks but said it would not prevent the proposed acquisition of Wachovia by Wells Fargo.
American International Group has borrowed 70.3 billion dollars so far, according to the Wall Street Journal. The loan was initially $ 85 billion, then increased to 122.8 billion dollars.
General Electric reported net income dropped 23% in the third quarter. The group targets a net profit of between 19.5 and 21 billion dollars, against 22 to 23 billion previously. He was on course to achieve its annual targets revised downwards in late September.
Moody's plans to reduce the note on the long-term debt of Morgan Stanley. Analysts fear that the first Japanese bank Mitsubishi UFJ abandon its plan to invest $ 9 billion in the U.S. bank. Yet Mitsubishi UFJ has yet indicated Friday that it did not throw in the towel.
The results in the third quarter of the upstream arm of Chevron should be lower than the second quarter, following lower crude prices and hurricanes in the Gulf of Mexico. Hurricanes have cut its U.S. production by about 150,000 barrels of oil equivalent per day in September, said Chevron.
Standard and Poor's placed under surveillance negative notes in the long-term debt (B-) Ford and General Motors. She also placed under surveillance notes of the subsidiary to 49% of GM, GMAC and the 100% subsidiary of Ford, Ford Motor Credit, both specializing in financial services. The agency said that: "The supervision reflects the rapid deterioration of global automotive markets and credit markets, which will be a serious challenge for the months to come."
Speculation surrounding Research In Motion. The decline of the title, following the financial crisis, reports Research In Motion attractive prey for giants like Microsoft. The RIM is traded around 60 dollars against 150 dollars ago as four months.
Crude drops to $ 75 rolled by the crash and melting of demand
Oil, which collapsed under $ 80 a barrel in New York and touched $ 75 in London Friday after the commencement of trading on Wall Street continues to push the price thresholds while demand prospects in shrivelling eyes.
Towards 14H30 GMT, a barrel of Brent North Sea for delivery in November s'échangeait to 78.43 dollars, down 4.23 dollar from its closing price on Thursday evening.
At the same time, a barrel of light sweet crude "for the same period was 79.96 dollars, losing 6.63 dollars on the New York Mercantile Exchange (Nymex).
Fell under 80 dollars in London during Asian trade, oil prices plunged in turn below this threshold in New York after the disastrous opening on Wall Street, which fell more than 6% and crossed the bar 8000 points for the first time since April 2003.
While all global bourses were again won by panic, oil plunged to 75 dollars in London and 78.61 dollars in New York, the lowest for a year.
Compared to its historical records from 11 July to over 147 dollars, oil dropped nearly half (49%) of its value.
"Oil prices move in affinity with the market action when lowering the morale of weak financial markets. Until credit conditions will normalize, it is unlikely that oil prices will disconnect the low Market action, "said Harry Tchilinguirian, an analyst for BNP Paribas.
But the collapse of the stock does qu'attiser fears on the oil market: driving the crude price floors as to deteriorate as economic growth prospects, and with them, forecasts Application of energy.
"Weak demand this summer in most OECD countries face a high price per barrel is now relayed by Outlooks economic mast and a financial crisis could put in recession OECD economies" Where demand is expected to fall 2.2% in 2008, has underlined the International Energy Agency (IEA) in its monthly report released Friday.
Knowing this, the Agency has again lowered its forecast for global demand for 2008 and 2009 respectively to 86.5 million barrels per day (MBD) and 87.2 MBD. Global demand for oil should grow again this year, but barely: +0.5% or 0.4 MBD.
For some observers, prices are now too low, even taking into account the decline in demand in industrialized countries.
"The exchange market are based on the fear that swept the reality of supply and demand", believes unanimously Khamar, the brokerage Sucden, which is expected to further price cuts .
"In a general negative climate, even market players who think that raw materials have fallen too low reluctant to buy for fear of being swept by a new wave of liquidations," he says.
The fall in prices alarm oil producers, who see their incomes melt at high speed when they suffer a sharp rise in production costs.
Faced with the threat, the Organization of Petroleum Exporting Countries (OPEC) announced it would hold an emergency meeting on November 18 in Vienna, "to discuss the global financial crisis and its impact on the oil market ". Evidence suggests that it will lower its production to adjust to a request shaky.
The market however seems to doubt the effectiveness of a response. "Why would they market OPEC seriously when dominoes collapse in the world?", And has interviewed Phil Flynn of Alaron Trading.
The dollar was operating a marked increase facing most currencies Friday except the yen, a few hours of a crucial meeting of major argentiers Group of Seven (G7), and against a backdrop of global collapse scholarships.
Towards 13H00 GMT (15H00 Paris), the euro bought 1.3494 dollars against 1.3590 dollars Thursday to 21H00 GMT.
The euro also declined to address the Japanese currency to 133.89 yen against 135.23 the previous day, after touching a new lowest since July 2005 at 132.83 yen.
After Wednesday below 100 yen for the first time in seven months, the dollar was down always, Friday at 98.93 yen against 99.50 yen yesterday.
It hit a new low since last March at 97.92 yen to the dollar Friday.
"Despite the bankruptcy of the insurer Yamato Life, the system should not deal with systemic crisis and the yen continue to reap the gains of a risk aversion extremely strong," commented analyst with Barclays Capital.
Against other currencies, the greenback was supported in the European exchange by the publication of the trade deficit the United States, down by 3.5% in August compared to July.
The U.S. currency has especially benefited from its role as refuge value while many stock exchanges had closed in Europe and is growing speculation on the outcome of the G7.
According to The New York Times, Washington is now planning to take shares in the capital of "many American banks to try to restore confidence in the financial system."
Some analysts also relaying of rumor about a possible guarantee of interbank lending by central banks.
The appetite for risk faded exchange market since the financial crisis, trade is limited and driven by panic or feelings more than by fundamentals.
In periods of high uncertainty, traders flee to shelters values, as the dollar or U.S. Treasury bonds, end their movements speculation as "carry trade", making up the yen, and carry out remittances (deleveraging) that immerse the currencies of emerging economies and high yield currencies like the euro whose interest rate is 3.75% or pound sterling (4.5%).
The pound sterling fell to a low Friday during Asian trade facing the greenback at 1.6792 dollar, a level reached since November 2003.
The Polish zloty dropped sharply, falling to 2.6956 zlotys to the dollar, a low since September 2007, while the National Bank of Romania intervened to support the leu.
The British currency back facing the European currency, to 79.34 pence per euro, fell face the greenback at 1.7055 dollar.
The Swiss currency back against the euro at 1.5137 Swiss francs to one euro, as against the dollar to 1.1186 Swiss francs to the dollar.
The ounce of gold was 886.75 dollars against morning fixing of 883.50 dollars the previous evening.
The Chinese yuan closed at 6.8359 yuan to one U.S. dollar against 6.8202 yuan yesterday.
The New York Stock Exchange went into steep decline Friday after the speech of President George W. Bush assured that the United States would continue to combat the economic crisis: the Dow Jones lost 3.62% and Nasdaq 2.72%.
Towards 14h45 GMT, the Dow Jones Industrial Average (DJIA) Lachi 310.55 points to 8268 points and the Nasdaq, mainly technological 44.73 points to 1600.39 points.
The index expanded Standard & Poor's 500 lost 3.79% (34.02 points) to 875.90 points.
The indices have experienced extreme volatility Friday morning, the Dow Jones had fallen by nearly 8% after the opening, going under the 8000 points for the first time since April 2003.
He was then briefly in the green shortly after 14H00 GMT, a new hosted by cries of joy on the floor of the New York Stock Exchange, according to images broadcast by the financial channel CNBC.
U.S. President George W. Bush called Friday to reject the "uncertainty and fear" which have greatly contributed to the economic crisis and ensured that U.S. authorities had the means to combat it.
The concerns are understandable but "anxiety can fuel anxiety and overshadow the efforts being undertaken," said the American president in a speech broadcast from the White House.
"We can resolve the crisis and we will do," he promised.
"The plan we are following is radical. It is the right thing. It will take time to have any impact," pleaded the president. "It is flexible enough to adapt to changes in the situation. Is sufficiently broad to succeed."
While the major argentiers of the Group of Seven most industrialized countries (G7) meet Friday in Washington to try to find a coordinated response to the crisis, Bush said that "the world is in the process of sending a message equivocal: we are in the same boat and we should draw from it all. "
"The uncertainty has caused anxiety among the people. And that's understandable," said Bush, whose term ends in late January.
"But Americans must know that the U.S. government acts. We will continue to act to resolve this crisis and restore market stability," promised the president. "The Americans can have confidence in our economic future. We know what the problems are. We have the means to respond. And we are working quickly to this end."
Mr. Bush should receive Saturday the finance ministers of the G7
