Global Markets Continue To Weaken

Current Futures: Dow -30.00, S&P -2.50, NASDAQ -3.00  

European Trade: Equity markets are again trading in the red, as evidence mounts about the scale of the economic downturn. Asian markets closed lower for a second day, while European markets opened the trading session lower for the third day in a row.

At 8:30 EST, a release is expected to show that the U.S. economy shed 525K jobs in December. If the forecast holds true, the unemployment rate is set to jump to 7%, while the U.S. economy would lose 2.4 million jobs in 2008, the most since World War II. December will mark the 12th consecutive month of declines in the labor market, according to the Non Farm Payrolls.

Tonight, the Nikkei declined for the second day, losing 39.60 points (0.45%) to 8,936.80. The Australian S&P/Asx gained 41.40 points (1.12%) to 3,735.70. Asian markets were helped to advance from the session’s low by a Japanese proposal to cut the capital gain tax. This decision would boost direct foreign investments into Japan, making the economy more competitive. The decision was taken mainly to boost the investments of oil-funded Middle Eastern sovereign funds.

In Europe, the U.K. Ftse fell 10.70 points (0.24%) to 4,494.67, while the German Dax lost 9.36 points (0.19%) to 4,870.55.

Crude oil is again heading lower, as consumption is set to drop. Crude oil for January delivery fell $0.30 to $42.10.

Gold is trading just above the 200-day moving average. Bullion for immediate delivery fell $2.80 to $852.90.

Previous Asian trade: Asian stocks head lower for a second day, following the momentum from the European and U.S. markets. It looks like the equity markets have been struck by the poor economic releases coming from the major economies again. 
A Bloomberg report shows that hedge funds had their worst year in 2008. The industry finished the year down by 18.3%, the most since tracking first begun in the early 1990’s. The previous worst performance was in 2002, when hedge funds tumbled on average 1.45%. This industry lost almost 45% from its peak reached in June 2008, affected by widespread losses and withdrawals.

The worst performing funds were equity hedge funds, which lost on average 26%, followed by funds of funds, which tumbled about 20% last year. However, macro hedge and futures funds, whose trades are based on investment decisions made by computer software programs, had positive earnings last year. Commodity hedge funds also posted record declines in 2008, led by the huge selling in the crude’s market.