The deal died in the Senate, so Wall Street’s likely to take a dive.
The failure of Senate talks on a $14 billion deal to rescue the U.S. auto industry sent Asian shares lower Friday, while the Japanese yen and government bonds gained on renewed risk aversion.
“It’s a very bad sign. U.S. stocks will likely nosedive later,” said Yasutoshi Nagai, chief economist at Daiwa Securities SMBC in Tokyo.
U.S. stock futures were lower in screen trade with Dow Jones Industrial Average futures down 320 points; spreadbetting firms in Europe were calling stocks sharply lower with CMC Markets tipping London’s FTSE 100 to fall 154 points and the French CAC-40 176 points.
The future of the U.S. auto sector was thrown into doubt after a marathon meeting of the GOP Senate Conference; Senate Majority Leader Harry Reid acknowledged on the floor of the Senate that lawmakers would be unable to reach agreement.
Several Republican senators pointed the finger at the United Auto Workers labor union as being unwilling to accept reductions in employee compensation.
It’s hard to figure out which is worse, the prospect of GM and Chrysler going belly up, or the GOP’s sadism by voting against this to try to break the unions by letting GM and Chrysler go belly up. More below the fold.