On 03 February, 2016 – A volatile day for stock indices

Stocks retreated in Europe and Asia but US shares staged a rally with the Dow and S&P in positive territory. 
United States
Stocks closed mostly higher after a surge in crude oil prices gave a respite to the suffering energy sector. US crude jumped, continuing a wild ride that sent prices plunging over the previous two days. The Dow Jones industrials were up 1.1 percent and the S&P added 0.5 percent. However, the Nasdaq, while cutting early losses closed 0.3 percent lower.
A sharp decline in the US dollar against other major currencies helped the market to rebound. Many US companies have been complaining that the appreciation of the currency is eroding their earnings. A weaker dollar also tends to send commodity prices higher. That was a relief to investors as well since a plunge in the price of crude oil has been decimating profits at energy companies.
Many of the top gainers were energy companies. Murphy Oil and Hess jumped. Yahoo plunged a day after announcing cutbacks and plans to sell businesses. Financial stocks were struggling again. Investors worry that lenders could suffer if more energy companies default on their loans. They also think the Federal Reserve might postpone its interest rate increases, which would have helped the banks earn more money by raising the rates they could charge on loans. Bank of America, Morgan Stanley and JPMorgan Chase retreated. Investors even sold companies that posted strong earnings. General Motors declined after the auto maker reported higher profits on sales growth in the US and China, but some analysts have fretted that auto sales may have peaked.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$3.50 to US$1,132.00. Copper futures were up 2.0 percent to US$2.10. WTI spot crude was up US$2.39 to US$32.27. Dated Brent spot crude was up US$2.31 to US$35.03. The US dollar was down against all of its major counterparts including the euro, yen, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index plunged 2.0 percent. The yield on US Treasury 30 year bond was up 3 basis points to 2.70 percent while the yield on the 10 year note added 2 basis points to 1.88 percent.
Europe
European markets tumbled Wednesday extending their losses from the previous two days. A weak performance in Asia weighed on sentiment. Continued volatility in crude oil prices and some disappointing corporate earnings news also weighed on the markets. The FTSE declined 1.4 percent, the CAC retreated 1.3 percent, the DAX was down 1.5 percent and the SMI lost 0.9 percent.
Crude oil prices showed signs of stabilizing early Wednesday on new reports that Russia is considering a possible coordination of efforts to stabilize oil markets. Investors initially reacted poorly to a US Energy Information Administration weekly report that indicated an increase in crude oil inventories.
Lufthansa dropped on a broker downgrade. Banks including Deutsche Bank, Commerzbank, Credit Agricole, BNP Paribas and Société Générale finished lower. Both Fresenius and Fresenius Medical Care retreated. In Paris, AXA declined after the insurer entered into an agreement with OTP Bank to sell its Hungarian banking operations. LVMH surged after the group posted record sales last year outpacing analysts’ expectations.
In London, Hargreaves Lansdown sank despite the financial services firm reporting a 6 percent rise in half-year pretax profit and raising interim dividend. Johnson Matthey declined after the specialty chemicals maker reported that its sales in the third quarter declined 1 percent to £736 million from last year’s £745 million. Barclays, HSBC, Standard Chartered, Royal Bank of Scotland and Lloyds Banking Group were lower on the day. Syngenta climbed in Zurich after Chinese chemicals group ChemChina offered more than $43 billion to take over the Swiss seeds and pesticides group.
Eurozone retail sales grew in December for the first time in four months, led by increased spending on food and drinks during the holiday season. The Eurozone private sector expanded at the slowest pace in four months in January. The composite output PMI declined to 53.6 in January from 54.3 in December.
Asia Pacific
Asian shares dropped following US stock indices and oil extended declines for a third day on concerns about the pace of global economic recovery. Encouraging Chinese service sector data failed to lift investor sentiment. In contrast to the manufacturing sector that remains in contraction, services industry hit a six month high in January with a PMI of 52.4, up from 50.2 in December.
The Shanghai Composite recouped most early losses to end 0.4 percent lower. The Hang Seng dropped 2.3 percent after the Hong Kong manufacturing PMI dropped to a four-month low of 46.1 in January from 46.4 in December.
The Nikkei tumbled 3.2 percent as oil once again sank below $30 a barrel and the yen edged higher against the dollar, reflecting higher risk aversion. Exporters including Canon, Fanuc, Sony, Sharp, Honda Motor and Panasonic retreated. Mazda Motor and Toyota dropped after reporting sluggish US sales for January. Casio Computer slumped despite the company reporting an increase in profit for the nine-month period. Nomura Holdings retreated after its third quarter profit fell by nearly half. Energy explorer Inpex and Japan Petroleum declined. Nintendo closed lower after missing earnings targets for its third fiscal quarter. Japan’s service sector PMI climbed to 52.4 in January from 51.5 in December.
The S&P/ASX and All Ordinaries tumbled 2.3 percent and 2.2 percent respectively. National Australia Bank completed the demerger and initial public offering of its UK subsidiary Clydesdale Bank. Economic reports painted a mixed picture, with the trade deficit widening 30 percent in December from the previous month and the Australian Industry Group’s performance of services index remaining in contraction territory in January, while approvals for the construction of new homes beat expectations.
The Kospi was down 0.8 percent after North Korea said it would push ahead with a planned rocket launch in further violation of UN resolutions following a nuclear test in January. South Korea’s government has unveiled new stimulus measures to bolster an economy struggling in the face of falling oil prices and exports. The Sensex lost 1.3 percent as investors fretted over slowing global growth.
Global Stock Markets

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*
The Bank of England announces its monetary policy decision and publishes its Quarterly Inflation Report. In the US, December factory orders, fourth quarter productivity & costs and weekly jobless claims, money supply and Fed balance sheet will be reported.
*Note — all releases are listed in local time.