On 22 September, 2015 – European markets declined on weak automobile stocks

Stocks dropped in Europe and the US. In Europe, the negative reaction was to the Volkswagen admission to manipulating emission test norms. In the US, shares were dragged down by comments about controlling spiraling drug costs to consumers.
United States
Stocks dropped Tuesday — falling commodity prices pulled raw material producers and oil companies down. The losses swept across all industries, with all 10 sectors of the S&P declining. The Dow Jones industrials were down 1.1%, the S&P lost 1.2% and the Nasdaq retreated 1.5%. Lingering uncertainty about China’s slowdown and the timing of the Federal Reserve’s first interest rate increase have made investors skittish.
Hillary Clinton, the leading Democratic presidential candidate, criticized drug companies for “price gouging” on Monday after news that Turing Pharmaceuticals had raised the price of a 53-year-old drug for a deadly parasitic infection to US$750 a pill from US$13.50. On Tuesday, Mrs. Clinton laid out a plan to rein in soaring costs and deny drug makers tax breaks for television advertising. Mylan and Celgene both dropped. Late Monday, Mosaic said it would cut production of its fertilizers as falling prices for crops have hurt the company’s sales. Mosaic pointed to swings in currencies and financial markets as other culprits.
ConAgra Foods tumbled after the company posted a US$1.2 billion quarterly loss. Goldman Sachs retreated and was the biggest drag on the Dow after Chief Executive Lloyd Blankfein said he had a “highly curable” form of lymphoma. Apple led the decline in tech stocks and was the biggest drag on both the S&P and the Nasdaq. Shares of Volkswagen suppliers BorgWarner, Honeywell and Delphi Automotive were down after the Volkswagen admitted to cheating on vehicle emission tests.
The Federal Reserve’s decision last week to keep rates near zero levels has left investors guessing when the central bank will make its big move, increasing volatility in the market. Atlanta Fed President Dennis Lockhart joined his counterparts from San Francisco, St Louis and Richmond, saying that he is confident policy will be tightened this year as concerns over turmoil in international markets should prove temporary.
Gold at the afternoon London fixing was down US$10.35 to US$1,122.90. Copper futures were down 3.6% to US$2.30. WTI spot crude was down 85 US cents to US$45.83. Dated Brent spot crude was up 10 US cents to US$49.02. The US dollar was up against the euro, pound, Swiss franc and the Canadian and Australian dollars. However, it declined against the yen. The Dollar Index was up 0.4%. The yield on US Treasury 30 year bond was down 7 basis points to 2.94% while the yield on the 10 year note was down 6 basis points to 2.14%.
Europe
European markets dropped Tuesday. Automakers were under intense pressure after Germany’s Volkswagen admitted to manipulating emission test norms for diesel cars in the United States. Drug companies were also down on news that Hillary Clinton will unveil a plan to take on outrageous price gouging in the specialty drug market. Mining and resource companies were also weak due to declining commodity prices. The FTSE retreated 2.8%, the CAC declined 3.4%, the DAX lost 3.8% and the SMI dropped 3.5%.
In Frankfurt, Volkswagen, which admitted to manipulating emission tests norms for diesel cars in the US, sank. Porsche, the parent company of Volkswagen, also plunged. BMW and Daimler also dropped. Volkswagen said it plans to set aside a provision of some €6.5 billion to cover the necessary service measures and other efforts to win back the trust of its customers. The company’s earnings targets for 2015 will be adjusted accordingly. In Paris, Renault and Peugeot sank along with auto parts maker Valeo. Axel Springer declined on reports that it is interested in acquiring Business Insider. E.ON and RWE both weakened.
In London, Mitchells & Butlers, an operator of managed restaurants and pubs, retreated. The company expects fiscal 2015 results to show growth on last year although to be at the bottom end of the range of current market expectations. RSA Insurance gained — the company plans to attract other bids after Zurich Insurance Group said it does not intend to make an offer to acquire RSA. Rolls Royce and GKN tumbled. Antofagasta and Anglo American were down on broker downgrades. Glencore also plunged, hitting a record low. Swatch and Richemont were down. Switzerland’s watch exports declined in August from a year ago. Watch exports fell 1.6% on the year in value terms. Wrist watch sales, accounting for the bulk of exports, dropped 2.4%. Drug makers Roche and Novartis dropped after proposals to set price limits as well as research and development spending guidelines for the pharmaceutical industry were mentioned in a US campaign speech. Merck, Sanofi and Shire declined as well.
Asia Pacific
Shares here were mixed Tuesday as tentative signs of stability in global markets and market talk that the European Central Bank is preparing to scale up monetary stimulus helped offset worries over global growth. Nonetheless, gains were largely muted after several Federal Reserve officials made the case for a possible year-end rate increase. Trading volumes were light as Japanese financial markets remained closed for the National Day holiday.
The Shanghai Composite added 0.9% with brokerages gaining ground on news of a possible link-up between London’s bourse and the Shanghai Stock Exchange. Tech stocks also were up ahead of Chinese President Xi Jinping’s first state visit to the United States which began during the Tuesday global market day. The Hang Seng also gained 0.2% ahead of China’s flash manufacturing PMI due on Wednesday.
Both the S&P/ASX and All Ordinaries were up 0.7%. Energy stocks paced the gains, with Woodside Petroleum, Oil Search and Santos climbing after US crude futures jumped overnight amid indications that US shale producers are continuing to slash output. Battered banks also advanced broadly, with NAB, Commonwealth, ANZ and Westpac closing higher. Investment bank Macquarie Group and insurer QBE also advanced. Rio Tinto and Fortescue Metals Group retreated while BHP Billiton edged up marginally. Gold miner Newcrest and rival Evolution Mining retreated. Gold prices held steady in Asian deals after giving back some of last week’s sizable gains on Monday.
The Kospi was up 0.9% on institutional buying, with auto and energy stocks pacing the gains. The Sensex tumbled 2.1% in volatile trading in response to a steep drop in European markets and US index futures as investors mulled over comments from several Federal Reserve officials making the case for a possible year-end rate increase. Increased volatility ahead of the expiry of September series F&O contracts on Thursday also prompted investors to book some profits at higher levels.
Global Stock Market Recap

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
China’s September flash manufacturing PMI will be released. Flash September composite PMIs will be reported for the Eurozone, Germany and France. The September flash manufacturing PMI will be released for the US.
*Note — all releases are listed in local time.