While you were sleeping: BusinessWire weekend wrap

Monday 29th September 2008

U.S. lawmakers yesterday reached accord on the $700 billion plan to allow the Treasury to buy toxic mortgage-related debt from finance companies in the wake of the housing slump.

Democrats and Republicans worked through the weekend to get agreement on the proposal in time for the opening of Asian markets today. The Nikkei 225 Index fell 0.9% on Friday and has fallen 22% this year.

Once U.S. lawmakers agree on the proposal the House would be able to vote as soon as today in the U.S.

The Standard & Poor's 500 Index rose 0.3% to 1213.01 on Friday, led by an 11% gain for JPMorgan Chase to US$48.24.

Wachovia slumped 27% to US$10 amid speculation record losses will for the bank to seek a merger. The New York Times reported it has started discussions with Citigroup.

The Dow Jones Industrial Average rose 1.1% to 11143.13. Still, the Nasdaq Composite fell 0.2% to 2,183.34, led by tech shares, after Research in Motion, maker of the BlackBerry maker, forecast weaker than expected earnings because of rivalry from Apple Inc.'s iPhone.

Research in Motion tumbled 27% to $70.76 on the Nasdaq, its biggest slump in more than eight years.

U.S. Treasuries ended the week higher on rising speculation the Federal Reserve will cut interest rates next month to help revive lending activity and economic growth. Two-year notes rounded, typically closely aligned with interest rate expectations, out their fifth week of gains, pushing the yield down to 2.1%

The yield on 10-year note fell 2 basis points to 3.87% on Friday.

Yields on junk-rated debt widened to more than 10 percentage points over Treasuries as investors avoided riskier assets. That's the first time since 2002 that they have reached distressed levels, Bloomberg News reported.

The U.S. dollar fell against the yen as concern about the bailout caused some investors to avoid riskier investments funded with loans in Japan's currency. The dollar weakened 0.3% against the yen to 106.09 yen. The euro fell 0.1% to $1.4611.

Crude oil fell in New York on Friday, as the Congress debated the rescue and concerns rose that demand for fuel will wane in the U.S. Crude oil for November delivery fell 1.1% to $106.89 a barrel on the New York Mercantile Exchange.

In the U.K. over the weekend, the BBC reported that the government is preparing to nationalize ailing mortgage lender Bradford & Bingley in its second rescue since taking on Northern Rock in February. A Treasury spokesman said a statement would be made before market opened in the U.K. on Monday, Reuters reported.

Talks also continued over the weekend on ways to restore confidence in financial group, which is looking to sell key assets to shore up its capital.

Fortis, which named a new CEO, Filip Dierckx, saw its shares slump 20% to a 15-year low on Friday. It told a media conference that assets sales would raise as much as 10 billion euros.

European stocks rounded out their second weekly decline. The DAX 30 fell 1.8% to 6063.500, the FTSEurofirst 300 declined 1.8% to 1104.79 and the FTSE 100 dropped 2.1% to 5088.5.

By Jonathan Underhill

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