insto - Australian financial markets

Risk aversion took hold of markets once again, as fears over Citigroup’s future, US interest rates and Greece’s sovereign ratings downgrade shook traders, who had been hoping to hold onto profits in the slow slide to year-end.

It was a bad day for US financial stocks, with Citigroup one of the hardest hit after the bank priced its US$17bn stock offering below market expectations, forcing the US Treasury Department to back out of a plan to sell some of its 34 per cent stake.

Treasury Assistant Secretary Herbert Allison said the government will unwind its stake in Citigroup, which it values at roughly US$26.5 billion, in the next six to twelve months. Allison's comments came from prepared testimony for his appearance before a House oversight subcommittee.

Bank of America was also among the losers of the financial sector after the bank picked a successor for outgoing CEO Ken Lewis. Bank of America fell 2.4 per cent after the bank late Wednesday named consumer banking head Brian Moynihan as its next CEO, replacing Ken Lewis, who will retire at the end of the year.
 

US market indices

US equity markets lost around 1.2 per cent in value across the board. The Dow lost 133 10 points to 10,308, the S&P 500 dropped 13pts to1,096 and the Nasdaq shed 27 pts to 2180.
 

US bonds

A view that, with Bernanke at the helm, the fed will keep interest rates low helped propel Treasuries to session highs while yields were on track for their biggest one-day drop in about eight weeks, reported Reuters. US benchmark 10-year Treasury notes last traded up in price, with yield, (inverse to price) at 3.49 percent, down 11 basis points from late Wednesday. 30-year bonds traded up with yields at 4.44 per cent, down 9 basis points on the day, said Reuters. US 2-year yields lost 8 points to 0.79 per cent.