US markets were mixed on Friday with the Dow and S&P finishing higher after a late rally in financial stocks. The late rebound came as investors anticipated that the US Treasury would take steps over the weekend to rescue mortgage finance companies Fannie Mae and Freddie Mac - this turned out to be correct. The day had started poorly after the government reported that the rate of unemployment had surged to five year high of 6.1% in August.
The Dow Jones gained 32.73 points to close at 11,220.96, the S&P 500 added 5.48 points to end at 1,242.31. The Nasdaq edged 3.16 points lower to 2,255.98.
Lehman Brothers was one of the strongest performing financial shares, rising 6.8%. The company benefited from news that Blackstone Group LP and Kohlberg Kravis Roberts & Co are each looking to buy parts of Lehman's real estate and asset management units.
Merrill Lynch did not fair so well after Goldman Sachs downgraded the company to "sell" and predicted a bigger third quarter and full year loss than previously expected. Although shares still managed to finish almost 2% higher.
On the upside in the tech sector, SanDisk rallied 31.1% after Samsung Electronics announced that it may buy the flash memory maker. In other deal news, Altria Group Inc is reportedly in talks to buy smokeless tobacco company UST Inc. Altria dismissed the reports as untrue, but UST shares still surged 25%.
US light crude oil for October delivery dropped $1.66 to close at $106.23 a barrel. COMEX gold for December delivery slipped $0.40 to close at $802.80 an ounce. Treasury prices edged lower, raising the yield on the 10 year note to 3.64%.
Markets across the globe are higher this morning after the US government took over troubled mortgage companies Fannie Mae and Freddie Mac. The takeover is the latest attempt by the government to shore up the slumping housing market. The Federal Housing Agency will take over both companies under a so-called conservatorship, replacing their chief executives and eliminating their dividends .Under the plan, the Treasury will receive $1 billion of senior preferred stock in coming days, with warrants representing ownership stakes of 79.9%.
The Nikkei jumped 412.23 points to close at 12,624.46 this morning. Unsurprisingly it is banking stocks that led the rise, with Mitsubishi UFJ Financial Group and Mizuho Financial Group both jumping more than 12%. Brokerage Nomura Holdings finished 9.7% higher on a newspaper report said it may bid for a stake in Lehman Brothers Holdings Inc.
The Hang Seng is currently 786.39 points higher at 20,719.67. HSBC Holdings advanced 5.5% on speculation that profit will recover on improvements in the US mortgage markets. Li & Fung Ltd added 10% after it agreed to sell a HKD3.88 billion stake to a unit of Temasek Holdings to help fund acquisitions.
The FTSE 100 is currently 199.8 points higher at 5,440.50. Banks lead the rally as expected, with HBOS up 13% and both Barclays and RBS gaining 12%. Mining stocks are also strong, buoyed by higher metal prices. Anglo American is 5% higher and Xstrata is up 5.9%.
Many of the London Stock Exchange clients across the country are being affected this morning after the company confirmed it was having "connectivity issues".