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On Wall Street, stocks fell Monday as investors responded to the a sharp drop in net income at Citigroup and news of the big US banks agreeing plans to set up an emergency fund to prevent the market in mortgage securities from unravelling. In addition the rise in the price of crude oil on the New York Exchange over $86 a barrel, also spooked investors.
Markets lost almost 1% with the Dow Jones Industrial Average closing 108.28 down to 13984.80; the S&P 500-stock index lost 13.09 to 1548.71, and the Nasdaq Composite Index closed off 25.63 at 2780.05.
Dow component Citigroup reported a 57% slump in third-quarter net income and its stock fell over 2%.
Citigroup, Bank of America and JPMorgan agreed plans for a $100 billion fund to buy mortgage-linked securities in a move to allay fears of a downward price-spiral that would hit the balance sheets of big banks.
Asia-Pacific stocks fell Tuesday, the most in four weeks, after renewed worries about the US economy.
The Morgan Stanley Capital International Asia-Pacific Index, which tracks more than 1,000 regional companies, fell 1.2% by mid-afternoon in Tokyo, where the Nikkei 225 Stock Average lost 1.27%. All regional markets fell, except in Taiwan, China, Thailand and Sri Lanka. Indonesia is closed for a holiday. Key benchmarks - Asia
In China, the benchmark Shanghai Composite rose to a new record of 6,092 - +1.03%. On Monday, it rose above 6,000 for the first time. A year ago, it was below 2000 and has more than doubled this year.
The Wall Street Journal says big unknowns loom over the market, starting with whether China is in a bubble that's in danger of popping. But there is strong evidence that even if the boom ends with a crash, China's investing frenzy will also leave behind much lasting good, because it is helping build a modern, market-driven financial system.
The Journal says from glitzy Shanghai to gritty industrial centers like Wuhan, tens of millions of Chinese have poured substantial savings into stocks. As a result, China suddenly has a stock market that is as powerful as its economy, now the world's third-largest. That is an astonishing turnaround for a system considered beyond repair three years ago.
The $3.7 trillion value of stock listed on China's Shanghai and Shenzhen exchanges at least equals the size of the country's annual economic output, a ratio historically seen in the U.S. This year, China's markets have had the world's highest volume of shares traded, and are on track to raise the most money of any exchanges through stock offerings.
The Journal says that the flood of investment is producing some potentially far-reaching benefits. For the first time since China's economic overhauls began almost 30 years ago, money from the investing public -- instead of the Communist Party -- is fueling expansion of the corporate sector. The boom is helping to create a class of Chinese companies among the most valuable in the world. And it is spawning a financial-services industry that is even helping foreign firms, such as Prudential Financial Inc. of Newark, N.J.
Yet China now faces a classic challenge: how to reap the benefits of a boom while avoiding a crash that could stall its economic progress.
Also on Monday, PetroChina Co., overtook General Electric Co. as the world's second-largest company by market value, gained on record oil prices. Its shares rose 1%t to HK$18.96 in Hong Kong, set to close at a record.
European stocks fell Monday for the first time in five days after Dutch company Royal Philips Electronics NV, Europe's biggest consumer electronics maker reported lower profits. Meanwhile, French car company shares fell after Swiss bank UBS AG recommended clients sell.
The Dow Jones Stoxx 600 Index fell 0.9% to 386.95 in London. National benchmarks fell in 16 of the 18 western European markets. France's CAC 40 dropped 0.7%; the U.K.'s FTSE 100 sunk 1.4% and Germany's DAX dropped 0.9%.
In Dublin, the ISEQ wqs off 0.77%.
National benchmarks - Europe
Irish Share Prices
Euribor Rates
AIB Daily Report
Bank of Ireland Daily Report
Currencies
The euro is trading at $1.4162 and at £0.6959.
International Monetary Fund Managing Director Rodrigo de Rato on Monday said the US dollar was overvalued and needed to fall further.
For live currency updates, check the right-hand column of the Finfacts home page.
Commodities
Crude oil is trading on the the New York Mercantile Exchange (Nymex) at $86.74 a barrel - up 61 cents from overnight.
The record rise in nominal dollar terms would have to hit about $103 to match the record high in real terms that was reached in early 1980.
Paul J. Harris, Head of Natural Resources Risk Management, Bank of Ireland Global Markets, commented:
An OPEC forecast that Q4 demand would exceed 31.4mio bpd only served to boost the upward surge in oil prices already buoyed by the tensions on the Turkish/Iraq border and fears that winter demand would see a tight market. Brent crude for November delivery is trading around the $83.20 mark, up since last nights close. US WTI traded at a record $86.22 in late US trade and touched $86.76. Additionally a low pressure system is forming in the SW Gulf of Mexico which may develop into a cyclone by Thursday.
The prognosis for the market is that the upward move remains strong and shows little sign of reversing in the near term. Because we are in unchartered territory it is difficult to call resistance levels on Brent crude but the next target appears to be in the $84.40 region. Given the fundamental structural demand/supply issues that exist between now and the end of the year coupled with the evident geopolitical risks the likely path for Brent will be towards the $85/bbl level. Wednesdays EIA data may yet prove to be the catalyst for this move. However, expect increasing rhetoric from policy makers over the potential damage to global growth of higher prices which may prompt a pause in markets before ultimately further advances resume.
Gold spot price
The spot price of gold is at $761 per ounce, up $4.20 overnight.
Mark O'Byrne, Director of Gold and Silver Investments Ireland, commented on Monday:
Record oil prices, surging base metal and soft commodities and an increasing realisation that there is a long term structural shift and trend toward higher soft commodity and food prices will lead to increasing inflation in the coming months. Increasing inflation while economic growth is slowing in major western economies will likely lead to a new form of stagflation. The stagflation of the 1970s led to gold rising from $35 per ounce to $850 per ounce in 1980 for a return of nearly 3000%. Gold will likely again outperform the majority of asset classes in the coming years.
Data from the Commodity Futures Trading Commission for the week ending October 9 showed that net long positions on copper, or the bets on prices moving higher minus the bets on lower prices, increased from 10,440 tonnes to 46,800 tonnes.
The FT says that high demand and record prices for commodities continued to push up international freight rates. The Baltic Dry index, a composite index of shipping costs for dry bulk materials, including ores, refined metals and agricultural commodities, hit a new record of 10,756, up 0.6 per cent on the day.
