Stockmarkets fell, the US dollar did likewise and interest rates on US Government securities were mixed as more problems emerged in markets around the world.
American retail sales fell sharply in February, home foreclosures were up on a year ago, and while the US dollar hit a new low against the euro and fell under 100 yen for the first time in 12 years, gold hit $US1,000 an ounce for the first time ever and oil touched $US111 barrel.
The dollar topped 1.56 to the euro, oil rose, then fell, and rose again to finish over $US110 a barrel, gold did the same after hitting the ‘grand’ an ounce mark in New York trading.
Wall Street fell sharply, then recovered to end up 35 points on the Dow.
That was after traders saw some hope that the worst was over after Standard & Poor’s forecast an end to the write-offs on dodgy subprime mortgages.
Wall Street to turned up from being off 150 points on the lower dollar, the higher oil price, and poor retail sales and the rise in foreclosures.
S&P said that it now saw write-downs from subprime-tied securities will probably rise to $US285 billion from the $US265 billion previously estimated.
"The positive news is that, in our opinion, the global financial sector appears to have already disclosed the majority of valuation write-downs,” S&P said. But the report forecast that losses on other debt such as leveraged loans are still likely to increase.
US retail sales suffered a surprising drop last month as consumers continued to cutback on purchases.
The US Commerce Department said sales fell 0.6% in the month, compared to a revised 0.4% increase in January. January sales were originally up 0.3%.Economists had expected a small 0.2% rise.
A 1.9% drop in car sales led the decline in February. Stripping them out, sales still fell 0.2% compared to a revised 0.5% gain in January ( 0.3% originally).
Sales fell across a wide spectrum of retail categories, including furniture, electronics, gasoline station and department stores.
Higher food prices even saw a 0.3% fall in grocery store sales last month while higher prices knocked petrol sales down 1%, even after inflation.
The rise in US home foreclosures was a continuation of the bad news for the past year.
National foreclosure filings rose 60% last month, but they fell slightly from January, a repeat of what has now become seasonal trend in these types of actions, according to RealtyTrac.
It said the owners of 223,651 homes received foreclosure filings last month, which include default notices, auction sale notices and bank repossessions. 46,508 of those were lost to bank repossessions, which more than doubled the figure in February 2007.
RealtyTrac said Nevada, California and Florida had the highest foreclosure filing rates in the nation. One in every 165 households in Nevada received a filing in February, up 68% from a year ago and more than three times the national average.
In California, foreclosure activity was up 131% year-over-year while in Florida reported 32,447 foreclosure filings, up 69% over February 2007.
In Australia the stockmarket fell 2.3% in a direct repudiation of the previous day’s sucker bounce in the wake of the Fed move to push more liquidity into the US money markets.
The greenback fell its lowest level since 1995 against the yen and a record low versus the euro after the Carlyle Capital hedge fund threw in the towel and called it quits.
It was one of a reported six or seven hedge funds around the world known to be either collapsing or on the edge of failure in the past day.
The US currency also slid to an all-time low against the Swiss franc as Carlyle said its mortgage-bond fund had defaulted on about $US16.6 billion of debt as of yesterday.
Not even a $US150 million offer from the Carlyle Partners was enough to keep the highly geared edifice afloat. It had borrowed over 30 times its initial capital and invested it in triple A rated mortgage bonds which plunged in value.
The US dollar fell to around 99 yen and 1.5624 to the euro. They were the lowest in 12 years and all time respectively. The Australian dollar rose overnight to finish around 94.50 USc in New York trading.
The Singapore dollar hit S$1.3795 to the greenback and China’s Yuan gained to 7.0950 against the dollar, strengthening beyond 7.1 for the first time since a fixed exchange rate ended in mid 2005.
Bloomberg reported that the central bank of Jordan is reducing the amount of dollars in its foreign reserves because of the falling value of the US currency and the need to service debt,
And a Qatar central bank official denied a media report that the six Gulf Cooperation Council nations will consider currency revaluation when they meet next week.
Yields on US Treasury securities fell, then rose to settle over 3.52% for the 10 year US treasury bond.
Stockmarkets in Asia fell the most in almost a week on concern widening credit losses and the fall in the US dollar.
The MSCI Asia Pacific Index fell 2.1%. The measure is down 13% this year. Japan’s Nikkei fell 3.3% to 12,433.44, the lowest since August 31, 2005. Hong Kong’s Hang Seng Index slumped 3.9%, the most in five weeks, after an influenza outbreak triggered the closure of primary schools and kindergartens. Most markets in Asia declined.
European stocks sharemarkets fell, the Dow Jones Stoxx 600 Index lost 1.4% and is down 23% from the high last June.
Driving much of this was the bad news from the US and the failure of Carlyle Capital to refinance its margin positions. It has defaulted on about $US16.6 billion of debt, and any remaining debt is expected to go into default shortly.
National markets dropped in all 18 of the markets in western
