The floor of the New York Stock Exchange on Sept 25 2008 in New York.
The floor of the New York Stock Exchange on Sept 25 2008 in New York.

Delayed US bailout sends dollar and markets down

Asian stocks and the US dollar fell while treasuries rose today after talks over the US$700 billion (Dh2,571 trillion) plan to save the financial system hit a snag and the biggest ever US bank failure dashed hopes for a quick recovery. Major European stock markets were expected to open down as much as 1.9 per cent, according to financial bookmakers, and US stock market futures pointed to a lower open on deep uncertainty about the fate of the White House rescue plan.

JPMorgan Chase & Co bought certain Washington Mutual assets for $1.9bn after the largest US savings and loan was closed overnight by a US regulator. The deal, the latest in the last few weeks that have shaken up the financial sector, showed how unstable the bank industry is and why stakes in agreement on the bailout plan are so high. The US dollar weakened against the yen and Swiss franc, two currencies associated with stability, as a bipartisan deal to get what is called the Troubled Assets Relief Program turned into a law may have to wait until at least the weekend.

"We'd have to pinpoint dollar weakness on the TARP plan and overnight there has been no progress on that. In fact it seems to be getting bogged down," said Jan Lambregts, head of Asia research with Rabobank Global Financial Markets in Hong Kong. "The Congress doesn't really want the plan ? no one really wants the plan ? but the alternative is too bad to contemplate." The dollar was down 0.7 per cent against the yen at 105.65 yen and off 0.3 per cent against the Swiss franc at 1.0860 francs.

The euro was up 0.1 per cent to $1.4636, cutting earlier gains but still a little more than two cents away from a one-month high hit on Monday. With commercial banks hoarding cash and reluctant to lend to each other, central banks have stepped in to fill the void. In a co-ordinated move to ease money market tension, the European Central Bank and the British and Swiss central banks said they would offer tens of billions of dollars for one week.

In South Korea, the Finance Ministry said it would inject $10bn or more into the local swap market until the middle of October to stave off persistent dollar funding shortages.

Lending between banks remained sluggish and confidence low. The spread of three-month eurodollar rates over three-month US Treasury bill yields, also known as the TED spread TED, widened slightly from late yesterday to 275 bps, but is lower on the week. The spread is used as a gauge of risk aversion and tightness in short-term lending. Short-term US dollar borrowing rates among banks have been relatively stable this week after a series of currency swaps were set up with the Federal Reserve and persistent liquidity injections. However, money markets across Asia showed evidence of increasing stress. In Singapore, three-month interbank rates jumped to 3.77 per cent, the highest since January. Hong Kong's three-month interbank rates eased slightly to 3.39 per cent after hitting a 2008 high yesterday of 3.80 per cent.

Equity markets reflected growing malaise ahead of further developments in Washington. Japan's Nikkei share average finished down 0.9 per cent and has traded in a very narrow range this week. The MSCI index of Asia-Pacific stocks outside Japan was down 1.7 per cent and on track for a fourth consecutive week of declines. Hong Kong's Hang Seng index fell two per cent, with shares of Ping An Insurance 2318.HK, China's second-largest insurer, falling 9.7 per cent. Ping An owns five per cent of European financial firm Fortis, whose shares tumbled on Thursday on market talk the Dutch Central Bank asked a rival bank to supply Fortis with capital.

US stock market futures extended a decline after a late-night White House session between the US Treasury Secretary Henry Paulson and congressional leaders ended in partisan gridlock. The S&P 500 future was last down 1.5 per cent. The JPMorgan purchase of WaMu assets cleared away some of the risk that a failing bank could drag others down with it, but bickering over the financial bailout in Washington only worsened a sense of dread about the economic outlook.

"What's really required at the moment is US Congress to step forward and show a united front on the bailout plan. That's really where the uncertainty is at the moment, that's really what will give markets a catalyst for turnaround," said Savanth Sebastian, an equities economist with Commonwealth Securities in Sydney. The online prediction market Intrade reflected a 61.5 per cent chance Congress would approve the White House bailout plan by Sept 30, down from a better than 90 per cent chance yesterday. Many congressional officials will leave at the end of the month to campaign for the presidential election in November. * Reuters

The biog

Favourite food: Tabbouleh, greek salad and sushi

Favourite TV show: That 70s Show

Favourite animal: Ferrets, they are smart, sensitive, playful and loving

Favourite holiday destination: Seychelles, my resolution for 2020 is to visit as many spiritual retreats and animal shelters across the world as I can

Name of first pet: Eddy, a Persian cat that showed up at our home

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Google wasn't new to busting out April Fool's jokes: before the Gmail "prank", it tricked users with mind-reading MentalPlex responses and said well-fed pigeons were running its search engine operations .

In subsequent years, they announced home internet services through your toilet with its "patented GFlush system", made us believe the Moon's surface was made of cheese and unveiled a dating service in which they called founders Sergey Brin and Larry Page "Stanford PhD wannabes ".

But Gmail was all too real, purportedly inspired by one – a single – Google user complaining about the "poor quality of existing email services" and born "millions of M&Ms later".

England-South Africa Test series

1st Test England win by 211 runs at Lord's, London

2nd Test South Africa win by 340 runs at Trent Bridge, Nottingham

3rd Test July 27-31 at The Oval, London

4th Test August 4-8 at Old Trafford, Manchester

Confirmed bouts (more to be added)

Cory Sandhagen v Umar Nurmagomedov
Nick Diaz v Vicente Luque
Michael Chiesa v Tony Ferguson
Deiveson Figueiredo v Marlon Vera
Mackenzie Dern v Loopy Godinez

Tickets for the August 3 Fight Night, held in partnership with the Department of Culture and Tourism Abu Dhabi, went on sale earlier this month, through and

Sri Lanka squad for tri-nation series

Angelo Mathews (c), Upul Tharanga, Danushka Gunathilaka, Kusal Mendis, Dinesh Chandimal, Kusal Janith Perera, Thisara Perera, Asela Gunaratne, Niroshan Dickwella, Suranga Lakmal, Nuwan Pradeep, Dushmantha Chameera, Shehan Madushanka, Akila Dananjaya, Lakshan Sandakan and Wanidu Hasaranga


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4. Michael Morkov (DEN) Deceuninck-QuickStep

5. Cees Bol (NED) Team DSM

General Classification:

1. Tadej Pogacar (SLO) UAE Team Emirates - 24:00:28

2. Adam Yates (GBR) Ineos Grenadiers - 0:00:35

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  • Always check the weather forecast before setting off
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