Financial Shares Are Back In The Spotlight, Dragging The Market Lower

Asian trade: Asian shares declined for a second day following the momentum from the U.S. markets. The Financial shares led the declines in the two markets.

It looks like the recent actions taken by the U.K. government brought attention back to investors of the precarious situation of the financial system. Banks’ shares took a very strong hit yesterday, because investor assess that authorities have their hands tied. Some investors fear that governments from across the world will try to nationalize banks now, practically shedding away shareholders. The most affected banks were the ones that investors fear the most, as State Street Corp, which plummeted nearly 60%.

A Bloomberg report shows that stocks fell by 14% from Election Day to Inauguration Day, the worst performance on record. The second-worst performance comes from 1933, when Roosevelt was elected president. However, back then, the market rallied 75% in the next few months.

Tonight, the Nikkei fell 155.94 points (1.93%) to 7,909.80. The Australian S&P/Asx lost 35.30 points (1.02%) to 3,441.30. The S&P tumbled tonight 44.90 points (5.28%) to 805.22, while the Dow Jones fell 332.13 points (4.01%) to 7,949.09. 

Crude oil rose very strongly yesterday, after it made a new low. Crude oil for February delivery gained $0.40 to $41.20.

Gold declined a little in the Asian session. Bullion for immediate delivery lost $3.40 to $851.80.

Previous Wall Street trade: At the close of floor trading on the NYSE, the DOW was on 7949.09 after falling 332.13 points (-4.01%) while the S&P finished on 806.22, down 44.90 points (-5.28%). it was the worst performance for the DOW on an inauguration day in history. The NASDAQ was the biggest percentage loser for the day, closing on 1440.86 with a loss of 88.47 points (-5.78%). Bonds were sold early in the day but were bought as stocks plunged after Mr. Obama's speech. The yield on the 2-year note fell 2.8 basis points to 0.700% while yield on the benchmark 10-year note fell 5.1 basis points to 2.370%. The dollar traded in risk aversion mode, gaining 1.39% on the euro, 3.61% on the pound and 2.94% against Australia's currency as it fell 0.98% to the yen.

Previous European trade: In Europe, the U.K. Ftse fell 17.07 points (-0.42%) to 4,091.40, while the German Dax fell 76.29 points (-1.77%) to 4,325.47.