Translated material
150 in the opposite direction
Volkswagen has leapfrogged all world markets
Negative financial reports and the rise of the Japanese yen led to the collapse of Asian stock markets, which pulled down the rest. However, the American market managed to temporarily overcome the downward trend, thanks to which the securities of Russian companies on the London Stock Exchange managed to recover somewhat yesterday. The dollar in Russia rose in price yesterday by another 30 kopecks - to 27.35 rubles.The problems began in the East. Even before the opening of trading in Japan, the Financial Seven, which unites finance ministers and heads of central banks of leading countries, issued a very short emergency statement designed to calm the situation on the Japanese foreign exchange market. “We are concerned about the recent excessive volatility in the yen exchange rate and the possible negative impact this may have on economic and financial stability,” the leading countries said in a document. Many analysts believe that financial authorities are ready to intervene in the market to curb the rise of the yen.
However, the G7 statement did not help the market. The yen continued to strengthen against the US currency and rose to a 13-year high of 93.87 from 94.63 yen per dollar. “The G7 statement could accelerate rate cuts by global central banks this week,” said BNP currency strategist Paribas Hans Redeker. The European Central Bank has already said it may cut interest rates at its meeting on November 6.
“I believe it is possible that the board will reduce interest rates again at its next meeting on November 6th. This will not necessarily happen, but the possibility exists,” ECB President Jean-Claude Trichet said yesterday.
"Worries over a rising yen, which is weighing on Japanese exporters, have hit the Nikkei index," said Julian Jessop, chief international economist at Capital Economics. “The markets were also put under pressure by a significant decline in American markets on Friday.” Asian stock indices closed significantly lower yesterday. Share prices of leading Japanese exporters fell: Sony Corp. -- by 7.41%, Panasonic Corp. -- by 6.84%, Toyota Motor Corp -- by 6.88%, Honda Motor Co Ltd -- by 5.69%, Mazda Motor Corp -- by 17.5%, Mitsubishi Corp -- by 10.95 %. Investors' concerns about the global crisis have increased due to negative corporate news in the financial sector and rising prices for funds on the interbank market. Thus, the securities of the Japanese bank Mitsubishi UFJ Financial Group Inc fell in price by 14.64%. The bank announced yesterday that it was selling 990 billion yen (or $10.7 billion) of new shares to replenish capital. Shares of other major banks also fell: Mizuho Financial Group Inc. -- by 14.82%, Sumitomo Mitsui Financial Group Inc. -- by 11.49%.
Hong Kong's three-month interbank rate rose 0.45% to 3.74%, triggering a record collapse in prices. South Korea's central bank cut its base rate by 0.75 percentage points to 4.25%, its biggest cut in history. Against this background, the South Korean KOSPI index increased by 0.82%. However, the Japanese Nikkei 225 index fell by 6.36%, the Hong Kong Hang Seng index by 12.7%, and the Chinese CSI 300 index by 7.12%.
European stock markets fell in early trading, following Asia. Expectations of a recession put pressure on the securities of banks and energy companies. By mid-trade, the pan-European FTSEurofirst 300 index was down 4.89%. Shares of banks HSBC, BNP Paribas, Societe Generale and UBS fell by 7-12%. Yesterday it became known that the largest financial group in Belgium, KBC Group, will receive 3.5 billion euros from the state. The group will issue preference shares to the government at a price of 29.5 euros per share, which corresponds to the weighted average closing price of the last three trading days, KBC said in a statement.
Shares of energy companies fell following oil prices: quotes of BG Group, BP, Royal Dutch Shell and Total fell by 4-6.5%.
At the same time, shares of the Volkswagen automobile concern jumped by 69.79% amid news that Porsche had increased its stake in VW. At the end of the day, the growth of Volkswagen shares on various exchanges amounted to 100-150%.
“European markets are showing significant volatility,” said Justin Stewart, investment director at Seven Investment Management. -- Nervousness intensified against the backdrop of a record fall in Japanese indices. Given the situation in Asian markets, the banking and retail segments will experience the greatest pressure.”
The American stock market also opened lower. As analysts note, American mutual funds and hedge funds are rushing to abandon risky assets and liquidate positions in stock markets. Tech stocks were weighed down by a report from The Wall Street Journal that defaults on loans for computers, software and other products have risen this year. IBM Corp stock quotes and Cisco Systems Inc fell within 3%. Quotes of Intel Corp fell by more than 4% in over-the-counter trading.
By the opening of trading, the Dow Jones index fell by 1.07%, to 8289.27 points, the S&P 500 - by 1.33%, to 865.12 points, NASDAQ - by 1.38%, to 1530.68 points.
However, later, positive statistics on home sales in the US and statements about a possible reduction in interest rates revived the market.
In addition, as reported by AFP, citing representatives of the Ministry of Finance, the US government will acquire shares of nine large banks for a total of $125 billion within a week. It is not yet known exactly which banks will receive assistance from the state, but Wells Fargo was previously named among the applicants , JPMorgan Chase, Bank of America, Merrill Lynch and Morgan Stanley. As AP notes, one financial organization has already admitted that it will issue shares in favor of the government: according to KeyCorp representatives, they will sell securities worth $2.5 billion to the government.
As a result, the Dow Jones index showed an increase of 0.67%, and the NASDAQ showed a decrease of 0.44%.
The Russian market was closed yesterday, and stock quotes of leading Russian companies on Monday on the London Stock Exchange fell by 5-15% in the first hour and a half of trading. ADR of Gazprom fell by 7.5%, LUKOIL - by 12%, Norilsk Nickel - by 13.5%, VTB - by 15.5%, Rosneft - by 16.5%. However, against the background of the recovery of the American market, domestic securities in London also began to adjust. Thus, Norilsk Nickel rose in price by 12%, Gazprom by 1.5%. The composite index of Russian securities in London, FTSE Russia, fell 2%, falling to 12% during the day.
The rate of the domestic currency continued to decline yesterday against the dollar and strengthen against the euro. The Central Bank increased the dollar exchange rate to 27.35 from 27.05 rubles. per dollar. In turn, the euro fell to 34.08 from 34.41 rubles. On the international market, the euro fell to 1.24 from $1.258 per euro, and the British pound fell to 1.5426 from $1.59.