new york • Wall Street turned in another stunning finish yesterday and extended its unprecedented streak of volatility — this time, to the upside, even as European markets hit renewed turmoil as Switzerland offered a $60bn bailout for UBS and European leaders pressed for reform of the world financial system.
Wall Street trade was volatile, with key indexes recovering from sharp losses but showing instability. New data showed US industrial production plunged 2.8 percent in September, the steepest decline since 1974. It is clear that investors are reacting in the extreme to any negative economic news, including disappointing numbers on industrial production that initially sent stocks skidding.
The Dow Jones Industrial Average closed up 401.35 points, or 4.68 percent, at 8,979.26. The Standard & Poor's 500 Index gained 38.59 points, or 4.25 percent, at 946.43. The Nasdaq Composite Index climbed 89.38 points, or 5.49 percent, at 1,717.71.
Wall Street's choppy session was marked by Citigroup Inc reporting its fourth straight quarterly loss, reflecting more than $13bn of loan losses and write-downs for complex and risky debt. Citigroup shares fell two percent.
Europe's main stock markets all fell hard after the Tokyo exchange suffered its worst loss for two decades, closing down 11.4 percent. Japanese Prime Minister Taro Aso said stocks are falling because investors believe the $700bn US banking rescue plan does not go far enough. The FTSEurofirst 300 index of top European shares ended down five percent at 858.41. London's FTSE 100 index tumbled 5.35 percent while in Paris the CAC 40 lost 5.92 percent and Frankfurt's DAX slumped 4.91 percent. “Recession is on its way,” said Carl Weinberg, chief economist at High Frequency Economics.
An emergency summit of the Group of Eight wealthy powers is expected in November and President Nicolas Sarkozy of France said he would press European calls for major reform of the financial system when he meets US President George W Bush this weekend.
EU leaders demanded greater oversight in Europe. The 27 EU leaders said they would set up a financial crisis cell to act as an early warning system and revived plans to strengthen Europe-wide supervision of cross-border finance groups.
Switzerland, meanwhile, was forced to take emergency measures to prop up its key banking sector, pouring almost $60bn into the biggest bank, UBS. The federal state will take a 9.3 percent stake in UBS. The second-biggest Swiss bank, Credit Suisse, turned to a group of investors for 10bn Swiss francs ($8.79bn) in new capital. The biggest participant is a Qatari sovereign wealth fund.
The dollar rose against the yen and euro as investors sought shelter in dollar-denominated assets. The euro fell 0.10 percent at $1.3447. Against the yen, the dollar gained 2.01 percent at 101.59.
Oil touched a 15-month low on rising US inventories. US crude settled at $69.85 a barrel, while in London, front month November Brent crude settled at $66.32 a barrel, down $4.48.
Fear of slowing global demand slammed commodity prices, driving copper prices down almost eight percent to a 33-month low. Gold sank to one-month lows below $800 as commodity funds and investors dumped liquid assets in favour of cash. Spot gold fell to a session low of $786.80 an ounce, before bouncing back to $801.10 an ounce.
Trading in QEWC shares suspended
doha • The Doha Securities Market (DSM) management yesterday suspended trading in shares of Qatar Electricity & Water Company (QEWC) until the end of the trading session. The management took the decision after the DSM received QEWC's third quarter financial results for the period ending September 30, 2008 during the official trading session.
QEWC reported a net profit of QR596.2m against QR514.2m for the same period in 2007. Earnings per share was QR5.96 compared to QR5.14 in the same period last year.
The decision was based on the provisions of Article 128 of the DSM's bylaws, which state: "The management may suspend the dealing in any particular security if it is likely to be detrimental to the market."
QEWC shares can again be traded from October 19 after investors have had the opportunity to study the results. All transactions in QEWC shares before the suspension were, however, executed.
