Overnight Markets Decline Ahead Of Auto-Industry Hearings

Current Futures: Dow -139.00, S&P -17.40, NASDAQ -26.00
 
European Trade: Asian Markets closed in the red, while the European shares opened lower, again. The U.S. futures also declined overnight, ahead of the car-industry hearings. 

Today, GM and Chrysler will have to face questioning about their restructure plan, and for an additional loan. The two car manufactures are already relying on the U.S. government to survive and to avoid bankruptcy, so these hearings are crucial to their fate. In case of a possible bankruptcy, 2 million jobs could be lost in the U.S. alone, not to mention other parts of the world. In addition to the government hearing, the two companies have to convince its bondholders to accept equity stakes. At a time when GM’s shares have tumbled 90%, this may not be easy to achieve…

In Europe, investors have started to raise some question the fate of Eastern European economies lately and its influence over the Euro-area. Some investors, including large institutions, expect the Eastern European states to face strong recessions this year. In the second half of 2008, most currencies from this area plunged at a strong pace, pricing in the poor economic outlook. The currency depreciation acts as a double-edged sword, because on one side, it helps the export market, but on the other side, it heaps another burden on the economy that, up to now, is a net creditor in foreign currencies. For example, Romania’s GDP expanded by almost 8% in 2008, but the economy is expected to grow only 1% in 2009, while the Hungarian economy is seen contracting this year by 3%, or even more.

The U.K. Ftse Declined 39.67 points (0.96%) to 4,095.08, while the German Dax has fallen 74.95 points (1.72%) to 4,291.69

Previous Asian trade: Tonight, the Nikkei fell 104.66 points (1.35%) to 7,645.51. The Australian S&P lost 52.60 points (1.50%) to 3,464.30.