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Stocks Tumble Around World, Dollar Declines After Fed Cuts Rate

Bonds, gold and crude oil climbed.

Stocks fell around the world and the dollar tumbled after the Federal Reserve cut its discount interest rate at an emergency meeting and JPMorgan Chase & Co. agreed to buy Bear Stearns Cos. for USD 2 a share, CNN News informed. Bonds, gold and crude oil climbed. UBS AG posted its biggest drop in more than nine years in Zurich and Japan’s Mitsubishi UFJ Financial Group Inc. fell to the lowest in four years. Europe’s Dow Jones Stoxx 600 Index and Japan’s Nikkei 225 Stock Average sank to the lowest since 2005, while futures on the Standard & Poor’s 500 Index decreased 2 percent on mounting concern that other financial companies will run short of cash. The dollar slid to record lows against the euro and the Swiss franc and fell to the weakest in 12 years against the yen, helping push gold and crude oil to highs. The Fed lowered the rate on direct loans to commercial banks by 25 basis points to 3.25 percent to help restore confidence in financial markets shaken by the collapse of Bear Stearns and more than USD 195 bln in asset writedowns and credit losses worldwide. The action coincided with JPMorgan buying Bear Stearns for about USD 240 M, less than a 10th of its value last week. S&P 500 futures expiring in June slumped 2 percent to 1,266.8 as of 11:50 a.m. in London. The index will slip into a bear market should it drop below 1,252.12, 20 percent lower than its Oct. 9 record and 2.3 percentage points from its current level. The Stoxx 600 fell 3.5 percent to 293.43, while the MSCI Asia Pacific Index lost 2.4 percent to 132.71. Japan’s Nikkei tumbled 3.7 percent to the lowest since August 2005. Global stock markets lost USD 2.4 trillion in market value from a peak in October as of March 14. That partly reflects the slump in the U.S. dollar. The dollar weakened to as low as 95.76 yen, a level not seen since August 1995, from 99.09 on March 14. It dropped to a record low of USD1.5903 per euro and an all-time low of 0.9658 Swiss francs. The Australian and New Zealand dollars fell on speculation. Gold for immediate delivery climbed as much as 3 percent to a record USD 1,032 an ounce as investors sought a haven against the weakening dollar. Crude oil gained as much as 1.4 percent to a high of USD 111.80 a barrel. ``The dollar is facing a credibility crisis,’’ said Koji Fukaya, a senior currency strategist at the Tokyo unit of Deutsche Bank AG, the world’s largest currency trader. Exchange rate reached RON 3.76 / EUR due to negative international circumstances The national currency depreciated yesterday with 1.37 per cent to the EUR and the referential exchange rate of the European currency increased with RON 0.0508, reaching RON 3.7608, compared to the Friday level of RON 3.71/EUR, announced by the National Bank of Romania (BNR). “Bad news related to American banks, especially to Bear Stearns, due to be overtaken by JP Morgan, lead to the depreciation of all currencies in the region. On the inter-banking market, there are chaotic and sudden movements due to stock exchange issues,” a stock market dealer declared, as quoted by Mediafax. Sursa: http://www.nineoclock.ro

Tags: world percent dollar bnr euro

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