Global Debt and Natural Disasters Impact US Financial Markets
Jack Reed|MWFH’s Contributor
U.S. stocks took a blow early this Wednesday due to renewed concerns about the euro zone’s sovereign debt crisis. The news about Japan becoming the world’s costliest natural disaster further added to this woe.
The S&P 500 Index dropped by 5.76 points to trade at 1,288.40 at 9:40 a.m. EDT while the Dow Jones Industrial Average dropped 27.55 points to trade at 11,991.08. Further, the Nasdaq Composite Index also crashed by 0.4 percent.
The euro weakened against the dollar from a four-and-a-half-month high due to the debt crisis in Portugal. It is feared that the minority government in Portugal might collapse as the lawmakers seem to be divided on the country’s parliament votes on budget cuts. As a result, the EUR/USD pair has retreated to $1.4127.
Amidst the growing financial crisis, Portugal Prime Minister Jose Socrates has declared that he will resign if his austerity plan to control the situation fails to work. Meanwhile, the Japan government estimated that the cost of March 11 earthquake could escalate to $309 billion, thus making it the most costly natural disaster till date. According to an estimate by the World Bank, this figure can reach $235 billion while Goldman Sachs pegs it at as much as $200 billion. The situation is deteriorating everyday with the government warning its citizens not to drink tap water because of radiation leaks in a purification plant in Katsushika Ward.
On the corporate end, the shares of Jabil Circuit Inc. has raised to $20.54 after an 8.51 percent increase. According to the company, this has resulted in a second quarter net income of $55.4 million as compared to $29.8 million a year back when the value of a share was $0.14.
Adobe Systems Inc. suffered a setback with its shares declining by 4.05 percent. However, analysts expect Adobe to earn $0.57 per share on revenue of $1.04 billion for the second quarter. Further, Crude oil futures advanced 0.35 percent to hover at $105.34/barrel while gold futures escalated 0.25 percent.
Following the debt crisis, the stock markets in Europe are presently trading with FTSE 100 up by 0.78 points, DAX30 down by 17.65 points and CAC 40 up by 1.14 points.
It is now up to the European leaders to materialize the uphill task of sealing the defenses against the debt crisis. A summit has been called for this purpose and we can now keep our fingers crossed to see what change it brings.
Author-Bio: Jack Reed is a financial writer with Oak View Law Group, a bankruptcy law firm. He writes on a wide range of financial topics with a special focus on debt relief and related issues.