Thornburg Mortgage shares lost more than half their value on Thursday as the result of bankruptcy worries. The lender said that it had defaulted on debt. The company may need more than $300 million to meet margin calls.
It’s not the only company with problems related to margin calls. Carlyle Capital, which is managed by the private equity company Carlyle Group, also said that it won’t be able to meet margin calls on its $21.7 billion portfolio.
Same store sales is a key measure of retail performance. The market was expecting a rise of 1.2% but showed a rise of 1.9%. The numbers though showed a slow down in department store sales and a rise in lower cost stores such as Walmart.
New foreclosures rose in the 4th quarter to 0.83% from 0.54% in the 3rd quarter. Late payments were also at their highest level in 23 years.
Looking forward and key jobs data is out in the US tonight. The market is expecting to see an increase of 25,000 jobs after a 17,000 fall in January. The numbers could surprise on the down side which would see another decline in the US market.
In Australia, the Reserve bank lifted interest rates by 0.25%. It’s the 12th consecutive increase of rates in Australia and comes as the central bank works to contain inflation. The official interest rate in Australia is now at 7.25%.
Australia’s trade deficit widened to $2.7 billion. The number was bigger than expected and was impacted by exports which have had troubles due to bad weather in Australia.
Japan and Korea both have interest rate decisions today and are expected to keep interest rates unchanged.
British Airways said that its profit margin would decline because of higher fuel costs. Its operating margin is likely to be 7% compared to a target of 10%.
The European Central Bank left interest rates unchanged. The ECB President Trichet favours interest rate rises. However, his comments sparked speculation that rates would remain unchanged for months to come.
Bank of England also kept interest rates unchanged.
It doesn’t look like the weakness in the stock market is over. Key jobs data in the form of US non-farm payrolls will be closely watched. If the report is weaker than expected, expect another sharp drop on Wall Street. The market is now expecting a 0.75% cut in US interest rates when the Federal Reserve meets on 18th March and is even hoping that they will make a move before that.
With stock markets around the globe once again falling, commodities are seeing a strong inflow of money. Gold, oil, resources and non-US currencies are once again the winners this week. Oil is up 70% in the last year as traders and hedge funds look for alternative investments to equities.
Head of Fundamental Analysis
HUBB Financial Group