While you were sleeping: BusinessWire overnight wrap
Dec. 11 – The Bush administration and congressional leaders reached a “conceptual agreement” on the US$15 billion
rescue package for the nation’s automakers may pass though some lawmakers still plan to stall its progress.
Louisiana Republican David Vitter vowed to use “every procedural tool available” to seek amendments and delay the
General Motors slid 5.1% to US$4.46 and Ford fell 4.6% to US$3.08. Under the proposal, the federal government would
appoint a so-called ‘car czar’ with the power to force GM and Chrysler into bankruptcy if they don’t devise a
restructuring plan by March 31. The two automakers have said they need at least US$14 billion to survive until then.
Money-market rates declined as investors awaited the outcome of the rescue package, amid speculation it will help thaw
credit markets. The London interbank offered rate, or Libor, for three-month loans in dollars fell 6 basis points to
2.1%, the lowest since 2004.
Stocks on Wall Street jumped about on speculation about the automakers’ deal and after figures showed Europe may be
heading into a deeper recession while China’s overseas trade weakened last month. The Dow Jones Industrial Average rose
0.9% to 8764.69 and the Standard & Poor’s 500 Index rose 1.1% to 897.85. The Nasdaq Composite gained 0.9% to 1560.64.
Aluminium producer Alco led gainers on the Dow, rising 4.8% to US$10.01. Home Depot rose 2.8% to US$23.80 and
McDonald’s Corp. advanced 2.1% to US$60.98. Chevron rose 2.3% to US$77.33 and Exxon Mobil gained 1.3% to US$79.19 after
the price of crude oil climbed more than 2%.
Crude oil for January delivery rose 2.4% to US$43.09 a barrel on the New York Mercantile Exchange, leading a rally in
commodities, on optimism the automakers’ rescue will help underpin economic growth and demand for fuel. The
Reuters/Jefferies CRB Index of 19 raw materials climbed moren than 3%.
Copper futures for March delivery rose 1.9% to US$1.4705 a pound in New York, trimming their slide this year to about
Gold had the biggest gain in two weeks as the U.S. dollar fell and commodity prices rose, which may stoke demand for
the precious metal. Gold futures for February delivery rose 4.5% to US$808.80 an ounce on the New York Mercantile
The dollar and the yen weakened as demand for the currencies as a haven diminished amid increased government efforts to
revive economic growth.
The dollar fell to $1.3008 per euro in New York from $1.2927 yesterday. The yen declined to 120.53 per euro from
119.07. The yen weakened to 92.60 against the dollar from 92.13.
Yesterday in Asia, China, the world’s fourth-biggest economy, unexpectedly posted the first decline in exports in seven
years while imports tumbled last month. The figures helped underline the extent of the global slump.
China’s exports fell 2.2% last month while imports fell about 18%, according to government figures. That pushed the
monthly trade surplus to a record US$40.09 billion.
Signs of a worsening slump in Europe included dwindling industrial output in Italy and France in October.
French manufacturing fell 3.2%, according to government figures, while Italy’s output fell 1.2%. The figures were worse
than economists had expected.
The U.K. government and central bank are now considering plans for a ‘quantitative easing,’ pumping billions of pounds
into the economy after rates cuts that slashed the benchmark rate to the lowest since the 1950s failed to arrest the
Stocks were mainly higher in Europe, as a pick-up in prices of raw material helped boost commodity companies.
Automakers rose on optimism about the U.S. rescue plan.
The Dow Jones Stoxx 600 Index edged up 0.1% to 205.37 and has slid 44% this year. Rio Tinto soared 20% after announcing
plans to slash costs and eliminate 14,000 jobs. BMW gained 2.3%.
Germany’s DAX 30 rose 0.5 percent to 4804.88 and France’s CAC 40 rose 0.7% to 3320.31. The U.K.’s FTSE 100 fell 0.3% to
4367.28 as 3I Group slipped and Standard Chartered dropped 6%, offsetting the surge in Rio’s shares.