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 Europe except Switzerland. London's FTSE 100 sank 1.5% as did Germany's DAX. France's CAC lost 1.4%. The Stoxx 50 slid 1.4% and the Euro Stoxx 50, a measure for the euro zone, lost 1.3%.
In Australia the market lost 2.3% as losses grew in the afternoon. That nearly erased all of the previous day's gains as doubts over the Fed's latest move to ease credit problems hit hard. Also hurting sentiment was the February jobless rates hit a new 33-year low, reviving worries about another hike in interest rates.
The ASX 200 index fell 122 points to 5135.9, based on the latest available data, after rising 2.4% in the previous session to log its biggest one-day jump in four weeks.
The index has now fallen 19% since the start of the year and is just 1% above its 2008 low hit earlier this week. Macquarie Group slumped 8.4% to $46.25. The National Australia Bank fell 3.8% to $27.27 and the Commonwealth Bank shed 5.6% to $39.50.
BHP Billiton dropped 1.1% to $36.38, while Rio Tinto, lost 0.6% to $124.50; Woodside Petroleum finished down 1.3% at $53.15. Iluka Resources, the world's biggest zircon producer, revealed it was looking for $353 million from a sale of shares to help fund the development of its Jacinth-Ambrosia project in South Australia.Its shares remained in a trading halt on $3.66.
Retail stocks were mixed, with Wesfarmers losing 51 cents to $36.64 and Woolworths slipping 50 cents to $27.20, but David Jones rose five cents to $3.43.
News Corp voting shares fell five cents to $19.90, its non-voting scrip rose six cents to $19.53, Fairfax fell 18 cents to $3.60 and Consolidated Media shed 9 cents to $3.59. Telstra fell 13 cents to $4.16 and its installment receipts were off 14 cents to $2.57.
