Foreign Markets
Stocks were battered overseas Monday, with Tokyo’s Nikkei 225 stock average dropping 288.27, or 3.8 %, to 7,280.15, while Hong Kong’s Hang Seng lost 494.11 points, 3.9 %, to 12,317.46. In Europe, Britain’s FTSE 100 was down 3.89 %, or 148.89 to 3,681.20, Germany’s DAX fell 102.50, 2.67 % to 3,741.24, and France’s CAC 40 lost 3.24 % at 2,614.79, an 87.69 point drop.
U.S. Futures
With the fresh concerns out of the financial sector, and a warning from the Oracle of Omaha himself, Wall Street looks in serious trouble today. Buffett said he is sure “the economy will be in shambles throughout 2009 — and, for that matter, probably well beyond — but that conclusion does not tell us whether the stock market will rise or fall.”
Ahead of the market’s open, Dow futures tumbled 152, or 2.16 %, to 6,900. Standard & Poor’s 500 index futures sank 14.60, or 1.99 %, to 719.60, while Nasdaq 100 index futures lost 21.25, or 1.90 %, to 1,095.75.
Currencies and Commodities
The dollar traded at 97.325 yen, down 0.2996% in the currency market. The dollar surged against European currencies. The euro lost 0.65% to $1.2586. The pound depreciated against the dollar, a 1.61% move to $1.4085. Gold gained $4.70 to $947.20 an ounce, as a safety play even as the dollar strengthened. Crude lost 5.47% to $42.31 as investor’s worry about the time frame of an economic recovery, and if any improvements to spur global demand will be made in the near term.
Corporate News
American International Group Inc.(AIG) which is considered too large to fail as it was once the world’s largest insurer, previously received about $150 billion in loans from the government, which now has an 80 % stake in the company. Sources say the insurer is about to get another $30 billion from the government after reporting a $61.7 billion 4th quarter loss.
HSBC, Europe’s largest bank by market cap, reported a 70 % drop in 2008 net profit and said it would raise 12.5 billion pounds ($17.7 billion) in new capital through a share issue while cutting 6,100 jobs in the United States.
Economic News
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Personal Income: the dollar value of income received from all sources by individuals. Consumer spending: Includes consumer purchases of durable and nondurable goods, and services.
The consensus decrease in personal income for the month of January is -0.2%., on par with December’s reading. Consumer spending is expected to rise to 0.4% from -0.1% in December.
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The ISM Manufacturing Index: The Institute for Supply Management surveys more than 300 manufacturing firms on employment, production, new orders, supplier deliveries, and inventories. The index gives a great look at the state of manufacturing and the direction it is heading. The cyclical nature of manufacturing could signal further economic downturn, and also can send off serious inflationary pressures in the economy on a higher than expected number.
The consensus figure is 33.8 for the month of February, down from January’s reading of 35.6.
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Construction Spending: The report measures the value of new construction activity on residential, non-residential, and public projects, giving a great indication of the economy’s momentum. Why would you expand your operation if you think the near term outlook is bleak? The same can be said on the residential front. Public project spending puts money back into the hands of those providing the labor and thus has its own ripple effect throughout the economy.
The consensus is for a drop of 1.5% in January after dropping 1.4% in December.
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