Asian
stocks fell, dragging the benchmark index to an 11-week low, as
commodities producers and traders declined along with rubber, corn,
zinc and platinum.
Woodside Petroleum Ltd.,
Australia's second-largest oil explorer, slumped after higher Chinese
fuel prices yesterday sent crude oil to its largest retreat in almost
three months. BHP Billiton Ltd., the world's largest mining company,
fell for a second day. China Petroleum & Chemical Corp. led Chinese
share gains on optimism refining losses will narrow.
About
half of Asia's benchmark indexes fell, including Japan's Nikkei 225
Stock Average, which dropped 1.3 percent to 13,942.08. China's CSI 300
Index jumped 2.8 percent. India's Sensitive Index fell as much as 2.6
percent after the nation's inflation rate accelerated to the fastest in
13 year
European
stocks fell last week, sending the Dow Jones Stoxx 600 Index to a three-month
low, as analysts forecast more losses at banks, carmakers said the
market was deteriorating and oil jumped more than $4 a barrel.
UBS
AG and Deutsche Bank AG declined for a third day as Lehman Brothers
Holdings Inc. cut earnings estimates for the banks. HBOS Plc sank below
the price of its rights offer after Standard & Poor's cut its
credit outlook for the bank. Fiat SpA dropped to the lowest since 2006
after forecasting a ``disastrous'' car market in Italy. Porsche SE
retreated for the first time in four days as crude climbed above $136.
National
benchmark indexes decreased in all of the 16 western European markets
that were open. The U.K.'s FTSE 100 slipped 1.5 percent. Germany's DAX
lost 2.1 percent, while France's CAC 40 sank 1.8 percent.
UBS slid 3.3 percent to 23.08 francs. Deutsche Bank AG, Germany's biggest bank, lost 3.1 percent to 58.62 euros.
UBS
may report $5.5 billion in second-quarter writedowns, related mostly to
residential real estate and monoline exposure, leading to a net loss of
2.2 billion Swiss francs ($2.1 billion), London-based analysts Jon
Peace and Chintan Joshi said in a note to clients today.
Deutsche Bank may write down 1.9 billion euros ($3 billion) in the quarter, they said.
Lehman
now forecasts a loss per share of 4.17 francs at UBS this year,
compared with an earlier estimate of 3.15 francs. The estimate for
Deutsche Bank was lowered to 4.58 euros from 5 euros.
``We
expect an extended period of revenue weakness for the investment
banks,'' London-based analyst Jon Peace wrote in a note to clients.
U.S. stock indexes fell the most in a month
last week as Fifth Third Bancorp's dividend cut and
worse-than-estimated results from FedEx Corp. renewed concern that
mortgage losses and a slowing economy will prolong the profit slump.
The stock market, and financials tanked on Tuesday despite Goldman's large beat. Ironically, the market sank when Goldman warned that U.S. banks may need to raise $65 billion in fresh capital in response to the subprime fallout. (U.S. financial companies have raised $159 billion so far).
Sure enough, the following day regional bank Fifth Third Bank (FITB) said it is going to raise $1 billion in fresh capital, sell $1 billion in assets and cut is dividend by 66% in an effort to shore up its balance sheet. Regional banks fell 9% for the week.
Citigroup compounded the financial sector's decline on Thursday, after announcing that it will face another barrage of write-downs in its second quarter, although the total amount should be less than its $19 billion first quarter write-down due decreased subprime exposure. Citi did note, however, that it will face a write-off on its bond insurer exposure similar to its first quarter amount ($1.5 billion), citing the widening in credit spreads of bond insurers -- which indicates the struggling bond insurers might not be able to pay claims on the assets they back up.
On a related note, Moody's cut its Aaa credit rating and put a negative outlook on the insurance units of both Ambac Financial (ABK) and MBIA (MBI ). Moody's lowered MBIA's unit by five notches and Ambac's unit by three notches, citing the difficulty the companies are having in writing new business and their limited ability to raise new capital.
Financials tumbled 4.7% for the week and is at its lowest level in five years.FedEx (FDX) fell 6% after reporting quarterly earnings that missed the consensus estimate. The Memphis, Tenn.-based company issued fiscal year 2009 earnings guidance well below expectations, citing sluggish U.S. demand and record energy prices.
GM retreated 16 percent to $13.79 and Ford dropped 7.3 percent to $5.81. S&P placed the carmakers' credit ratings, already five levels below investment grade, on negative review. While the carmakers will be able to pay their debts this year, their cash may shrink to ``undesirable levels'' by the end of 2009, S&P said.