Morning Update

Paulson and Bernanke urge quick action

US Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke will testify before the Senate Banking Committee beginning about 9:30 a.m. ET today. In an early release of the Chairman's testimony, Bernanke will tell the Committee that markets remain "under extraordinary pressure." Action by the Congress is "urgently required" to stabilize the situation, deal with the "crisis at hand," and avert what otherwise could be very serious consequences for the financial markets and the economy. Paulson will say that financial turmoil has hit a new level, and he will also implore Congress to quickly pass the $700 billion bailout package and not get bogged down by trying to enact unrelated provisions to the bill.

Europe under pressure

Stocks in Europe are falling ahead of testimony Bernanke and Paulson, worries over the timing of the $700 billion rescue package, and big losses on Wall Street yesterday. Although a bill is still eventually expected to be approved by Congress, wrangling between the political parties has created an air of uncertainty over the details because credit markets are still not functioning efficiently. Financials are under heavy pressure, while the mining sector loses altitude following recent gains. Worries about the broader economy are also pressuring sentiment. The manufacturing and service PMI Indexes in September eased and remain below the line that indicates the economy is contracting. The drop in crude prices did little to underpin growth and the European Central Bank continues to focus its energies on inflation rather than the weakening economy.

Lingering fears pressure much of Asia

The steep sell-off in US equities and the jump in crude prices yesterday, and how the final financial bailout may look pressured much of Asia in overnight action. The rally in Hong Kong and China came to an end due to concerns that the unprecedented actions by the US Treasury Department may not be enough to avert a recession. Australian shares ended lower, but South Korea managed to shake off the gloom and finish higher. The market in Japan was closed for a holiday.