Bear Stearns sale stokes market jitters
Global markets are nervously watching for the latest developments out of the United States after Bear Stearns, the 85 year old investment bank, was sold on Sunday to rival JP Morgan for $US 236 million.
The deal will see Bear Stearns shareholders get stock in JP Morgan equal to about $US 2 per share compared with Bear Stearns closing price on Friday of 30 dollars, and a peak of 169 dollars in January 2007.
This comes after America's 5th largest investment bank sought emergency funding from the U.S. Federal reserve on Friday, as investors deserted the stock.
The Fed has also announced it will lower its discount rate – the rate at which it lends to banks – to 3.25% at an emergency Sunday meeting.
This comes ahead of its meeting this week, where it is widely expected to cut the overnight rate significantly. Some analysts say it will cut by a full percentage point to 2%.
Also during the week Lehman Brothers, Morghan Stanley and Merrill Lynch will be announcing financial results.