Sharechat Logo

US Senate fails to agree on auto rescue, Asia stocks tumble

Friday 12th December 2008

Text too small?

The US Senate failed to reach a compromise on the US$14 billion plan to bail out the auto industry. Stocks tumbled in Asia on the news and the price of oil dropped.

Senate Majority Leader Harry Reid said there was "too much difference" on the proposal to reach an accord. General Motors and Chrysler have said they will run out of cash by March if they don't get federal aid.

Japan's Nikkei 225 Index fell 5.8% and in Hong Kong, the Hang Seng fell 6.3%. Crude oil dropped by almost US$2 a barrel to US$46.11. S&P 500 futures slumped 21%.

The impasse raises the prospect that two of America's most iconic companies will be allowed to fail. Because of the rate GM and Chrysler are burning cash, the decision couldn't wait for President-elect Barack Obama's inauguration in January.

"This puts the prospects of a rebound further out," said Paul Richardson, who manages about NZ$150 million at BT Funds Management. "It may mean more write-downs and a longer-term impact on the U.S. economy."

GM, Ford and Chrysler employ nearly 250,000 workers and a further 100,000 work for companies that supply parts. GM and Chrysler have said they may fail without government help as the credit squeeze and a slump in consumer sentiment erodes sales. They've also lost ground to Japanese and Korean automakers who have produced smaller, more fuel-efficient models, with better reliability ratings.

By Jonathan Underhill



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Contact Energy Limited (NZX: CEN) Considers Green Capital Bond Offer
Tourism Holdings Limited (NZX: THL) Sells Mighway and SHAREaCAMPER to Camplify
26th October 2021 Morning Report
Harmoney Corp Limited (NZX: HMY) Prices $105m Inaugural ABS Transaction
New Zealand Rural Land Company Limited (NZX: NZL) Agreement to acquire large scale dairy asset portfolio
EROAD Limited (NZX: ERD) launches Clarity Solo Dashcam
22nd October 2021 Morning Report
Pictor ready to roll out game-changing COVID antibody test in New Zealand
Scott Technology Limited (NZX: SCT) Announces FY21 Results
21st October 2021 Morning Report