Auto Industry In Focus Again

Current Futures: Dow -19.00, S&P -1.70, NASDAQ -4.00  

European Trade: European equity markets opened the new trading week in the red, while the U.S. futures retraced the gains seen earlier and are currently lower. Asian shares closed the trading session higher.

U.S. futures turned negative in the European session, despite trading in positive territory during the Asian session. The move was started as speculation increases that earning forecasts are likely to fall at a strong pace in the coming quarters. Toyota, one of the biggest car-manufactures in the world, dramatically cut its forecast for the 2008 fiscal year. The company said it is set to lose around $1.7 billion. The previous forecast was for a $6 billion profit.

Every car-manufacturer in the world faces a similar situation, not just Toyota. Some other companies from the industry have cut their earnings forecast by a whopping 80% for the current fiscal year. This spells trouble for both GM and Chrysler, showing that demand is not likely to pick any time soon. Most likely, the two U.S. companies will need another substantial loan by the end of the first quarter in 2009.

However, the important thing right now is that the Government stops the bankruptcy of the two companies, halting another wave of unemployed persons hitting the economy, adding further strains. 

In the Asian session, the Nikkei gained 135.26 points (1.57%) to 8,723.78, while the Australian S&P/Asx fell 58.30 points (1.61%) to 3,557.40. In Europe, the Dax lost 100.77 points (2.15%) to 4,595.93. The U.K. Ftse fell 39.33 points (0.92%) to 4,247.60

Crude oil is trading above the $40 per barrel benchmark. Crude oil for January delivery rose $0.73 to $43.09

Gold posted strong gains in the Asian session. Bullion for immediate delivery gained $13.40 to $850.80to $43.18.

Previous Asian trade: Asian shares rose and U.S. futures are pointing to a positive start down Wall Street, after it was announced last week the U.S. car manufacturers would get the much-needed funds for surviving another few months. 

The Japanese Nikkei advanced, even though a release showed that Japanese exports plunged nearly one third in November from one year earlier. This is the biggest drop on record, confirming the Japanese economy might be in a deeper recession than previously thought. Exports are the main engine of the Japanese economy, and such a large drop reflects a very distressed business environment. Most likely, the unemployment rate is set to rise from the ultra-low rate of 4%.

In Europe, the credit crisis claims some new victims. In Ireland, the first country that guaranteed all bank deposits, three banks needed government intervention in order to avoid bankruptcy. The Irish Government injected nearly $8 billion to take control of the three financial institutions.