Bank of America Corp, the country’s largest bank, has decreased by 2.2% in Germany’s trading. Citigroup Inc was down by 0.7% and Goldman Sachs Group Inc was down by 0.8%.

Futures on Standard & Poor’s 500 index that are due in September have gone down by 0.7% to 1,150.2 in the morning trading in London. Dow Jones Industrial Average futures that are due in September have declined by 78 points or 0.7% to 11,063.

The S&P 500 was up by 3.4% the day before due to investors hoping that the Federal Reserve will finally step in to boost economic growth in the United States.

According to Henrik Drusebjerg from Nordea Investment Management, “Some investors are worried Bernanke might not hint an intervention after all, but the other option is that he says something and that it doesn’t work. There’s a big question mark as to whether QE3 will actually do any good for the real economy.”

Durable goods orders, not including transportation equipment, have gone down by 0.5% in July following a 0.4% increase in June, according to an estimate from a group of economists surveyed by Bloomberg. They have also estimated that the economy has moved up by 1.1% during the second quarter of the year which is lower than the previous prediction of 1.3%.

The financial institution has also showed that there was a decrease in bad debt while boosting default provisions as China has become very strict when it comes to the requirements on property loans and credit to local government units. The stock was the second worst performer compared to the other large lenders this year due to anxiety over credit growth that may put the country at default.

According to James Liu from CIMB-GK Securities Research, “Bank of China is under more pressure to make provisions as it expanded its loan book much faster than its peers. The banks have also disappointed shareholders by limiting dividend payouts as they focus on capital requirements and credit quality.”

The total number of loans of Bank of China has moved up by 72% in the last two years which is outpacing the 49% credit growth of other competitors such as Industrial & Commercial Bank of China Ltd and China Construction Bank Corp.

The bank loans in China have increased by 9.8% in the first six months of the year to 6.2 trillion yuan from 5.66 trillion yuan by the end of year 2010.

Bank units of Mitsubishi UFJ Financial Group Inc, Sumitomo Mitsui Financial Group Inc, and Mizuho Financial Group were just three of the many banks that were downgraded one step lower by Moody’s following the downgrade on the government’s credit rating today.

According to Moody’s, “The downgrades primarily reflect the combined impact of the change in the rating of the government of Japan - as a supporting entity - and Moody’s reduced assumptions for government support to the banking system in a stress scenario.”

Profitability scores of the financial institutions in Japan have ceased by 20 consecutive months due to less loans that were a result of a contracting economy that was hit by deflation and less demand for credit. In order to fill the lending void, financial institutions have been purchasing the country’s debt, having 154.3 trillion yen or $2 trillion in value of government securities this month of June which is near a record of 158.8 trillion yen during the month of April.

Financial shares have gone down due to the downgrade. Mitsubishi UFJ which is regarded as japan’s largest publicly traded bank was down by 2.9% to 332 yen in the afternoon trading in Tokyo. Sumitomo Mitsui has gone down by 1.8%. Mizuho was down by 0.9%. Topix stock index declined by 1.1%.

Bullion for immediate delivery moved up by 0.8% to 1,913.50 for every ounce prior to trading at $1,897.38 for every once before noon in Singapore. The precious metal has now increased by 17% in august which is now considered as its best monthly performance since the year 1982. Silver was up and is now at its most expensive value in over three months.

According to Peter Richardson from Morgan Stanley Australia Ltd, “Gold has continued to blast ahead even with a relatively strengthening U.S. dollar, strongly performing treasuries and other safe havens. All of that tells me that this is really all about preserving real purchasing-power.”

Gold has been increasing in value for the 11th year and has moved up by 34% due to holdings in exchange traded products that have gone up on August 8 and also due to central banks adding to their reserves once more after a long time.

Gold is said to reach about $2000 by the end of the year which can help put its gains to 41%. This will be its biggest gain in over three decades, according to predictions made by 13 traders and analysts that have been surveyed by Bloomberg during a conference in Kovalam in South India this August 20.

Samsung Electronics Co which is the biggest exporter of consumer electronics from South Korea has moved up by 2.5% in Seoul trading. Toyota Motor Corp which is the automotive manufacturer that acquires 28% of their sales from the North American region has gone up by 1.2% in Tokyo trading. Canon inc which is the world’s biggest camera manufacturer has gained 1.3%. Newcrest Mining Ltd which is Australia’s number one gold producer has moved up by 2.3% in Sydney trading following the price rally of one of the most precious metals in the world.

The MSCI Asia Pacific Index has gained 0.5% to 118.90 in the morning in Tokyo with three stocks increasing for every two stocks that fell. Global equities wiped out over $8 trillion in market value in the last month. Investors let go of stocks following reports that indicate the American economy is slowing down which has sparked speculations that the US Federal reserve will start to have their third round of quantitative easing to boost economic recovery.

According to Ryuta Otsuka from Toyo Securities Co in Tokyo, “Risk aversion came to a halt in the U.S. and European markets yesterday. Stocks are likely to be bought as valuations and technical indicators indicate they have been oversold.”

The consumer price index was up by 7.9% compared to the year before, following a 5.6% increase in the month of June, according to the figures released by the government yesterday in their official website. Excluding adjustments that are due to housing subsidy, the prices were up by 5.8%.

The economy of Hong Kong is bound to decline on the third quarter of 2011 following another decline in the second quarter of the year, according to figures from Morgan Stanley and Daiwa Capital Markets. Increase in salaries may put pressure on profit margins just when big corporations such as McDonald’s Corp have issued reports that they are having a hard time with rent and material costs that are unexpectedly going up as well.

According to Kevin Lai an economist from Daiwa based in Hong Kong, “The headline CPI figure is pretty scary, and that will change inflation expectations among residents in a drastic way. The higher business costs and rising expectations for wage gains may force some companies to close and hasten the recession.”

The inflation linked bonds of Hong Kong has gone up to HK$107.15 in today’s trading which is the highest since their entry in the market on July 29. The primary sale price was recorded at HK$100.

Wall Street firms have increased estimates for Standard & Poor’s 500 Index gains for the tenth consecutive quarter, putting a 17% profit for this year, according to information that have been put together by Bloomberg. That is about 9.9 times over what economists predict gross domestic product will increase. The average ration since the year 954 was 5.4 times, according to their figures.

The difference in the numbers emphasizes that skittishness that are seen in investors whose confidence have been affected by the European debt crisis as well as the slowdown of the world’s economies. The S&P 500 is having one of the largest swings and changes and has lost approximately 18% since April 29, putting the value of the stocks at 12.3 times the earnings which is the lowest recorded since March 2009. Benchmark indices in Germany, Brazil, and Hong Kong have gone down by 20%, and this is what they have all considered the bear market.

According to Keith Wirtz from Fifth Third Asset Management, “Everyone’s struggling right now with two questions. Is there a recession on the horizon, and where will earnings go? There’s a void of information. People are discounting the chances of a recession and what that could mean for earnings.”

The S&P 500 futures that are due in September have declined by 0.3% to 1,120 in the afternoon in Tokyo today.

Joint euro bonds would obligate European Union treaty alterations that would have to go through rigorous discussions for a long period of time and might be against the German constitution, according to Merkel. While common borrowing may be considered in the near future, bringing in euro bonds at this point in time would affect the economic stability of the region. Merkel insists that euro bonds are not the solution for the debt crisis for now.

Merkel further said, “At this time - we’re in a dramatic crisis - euro bonds are precisely the wrong answer. They lead us into a debt union, not a stability union. Each country has to take its own steps to reduce its debt.”

Merkel has made her voice heard especially with her opposition to the euro bonds since she came back home from her summer holiday the week before. She has campaigned for resistance to common European borrowing.

Investors are pursuing euro bonds the week before due to increasing concerns over the European debt crisis and the slowdown in the global economy has driven the stocks from the European Union to their lowest levels in over two years.

Merkel said, “Politicians can’t and won’t simply run after the markets. The markets want to force us to do certain things. That we won’t do. Politicians have to make sure that we’re unassailable, that we can make policy for the people.”

The Industrial & Commercial Bank of China Ltd, which is China’s biggest lender, and China Vanke Co, which is China’s biggest property developer, were the front runners in terms of declines for financial companies following the yuan’s climb to the highest level in just three weeks. Jiangxi Copper Co, which is the biggest producer of metal in the country, has gone down to its lowest level in 11 months.

According to Tu Jun from the Shanghai Securities Co, “Investors have become sensitive to negative news and numb to good news. The market is still bearish amid tight liquidity and concern over the global economic slowdown has added to the bearish sentiment.”

The Shanghai Composite Index declined by 18.5 points or 0.7% to 2,515.86 in the afternoon trading which is its lowest level since July 19. The index was down by 2.3% the week before which is its fifth week of plunge, the longest recorded since December last year. The CSI 300 Index was down by 1.1% to 2,777.79 today.

The Shanghai index was down by 10% this 2011 as the central bank of China increased their interest rates five times and asked the lenders to put cash as deposit reserves for twelve times since the beginning of 2010 in order to cool down inflation.

Investors are trying to discuss with the Federal Reserve a new round of asset purchases. Barton Biggs, more popularly known as the managing partner of cofounder of Traxis Partners LP, along with other investors, are hoping that the Federal Reserve will be open to their suggestion. The report that was released this week regarding the 0.5% increase in the consumer price index can be a good sign that the Federal Reserve may consider pushing for measures that can save the country’s economy.

According to Marc Chandler from Brown Brothers Harriman & Co, “It’s hard to say we have stagflation, but we do have inflation too high for the Fed to do QE3.”

The United States’ economy needs a helping hand and this was emphasized by the Philadelphia Fed’s general economic index that has declined to negative 30.7 this month of August which is considered to be the lowest since March 2009 when the economy stumbled into recession.

The increasing inflation has sparked a debate among the policy makers following the three regional Fed bank presidents that have said no in the agreement last week. They were Philadelphia Fed President Charles Plosser, Dallas Fed head Richard Fisher and Narayana Kocherlakota from Minneapolis.

According to Paul Dales from Capital Economics Ltd, “We probably won’t get any more significant policy stimulus this year, but early next year once it becomes clear that core inflation begins to fall back, then QE3 could well be on the table again.”