On 09 February, 2016 – Global stocks retreat again
European stocks continued to tumble while US stocks gyrated between gains and losses.
United States
US stocks ended a volatile session down slightly Tuesday as a late day rally by materials and healthcare shares offset another big drop in oil prices. Markets seesawed between gains and losses though energy companies and banks were down. Investors were weighing the latest batch of company earnings and looking ahead to two days of testimony before Congress by Federal Reserve Chair Janet Yellen. The Dow Jones industrials and S&P slipped 0.1 percent while Nasdaq retreated 0.35 percent.
Viacom slumped after the company, the owner of Nickelodeon, MTV, Comedy Central and Paramount Pictures, reported lower revenue for its latest quarter. Twenty-First Century Fox declined after it reported quarterly revenue that fell short of expectations. Goodyear Tire & Rubber gained after the company’s latest quarterly earnings easily beat forecasts. Martin Marietta Materials jumped after it reported a sharp increase in earnings. Wendy’s declined even after the fast-food company’s profit rose more than expected. Coca-Cola rose late in the session after reporting stronger than expected quarterly profits.
After markets closed Disney delivered the highest quarterly earnings in company’s history thanks to success of Star Wars. Disney reported a 13.8 percent jump in quarterly revenue. Revenue rose to $15.24 billion in the first quarter ended January 2 from $13.39 billion a year earlier. Quarterly net income rose to a record $2.88 billion or $1.73 per share from $2.18 billion or $1.27 per share a year earlier.
December job openings climbed to the second-highest level on record, a sign demand for labor remains strong.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$2.25 to US$1,191.00. Copper futures were down 2.5 percent to US$2.04. WTI spot crude was down US$1.27 to US$28.42. Dated Brent spot crude was down US$2.09 to US$30.79. The US dollar was down against the yen, euro, pound, Swiss franc and the Canadian dollar. However, it gained against the Australian dollar. The Dollar Index was down 0.8 percent. The yields on both the US Treasury 30 year bond and the 10 year note slipped 1 basis point to 2.56 percent and 1.73 percent respectively.
Europe
European stock indices retreated once again. The DAX and SMI extended their declines to seven consecutive sessions while the FTSE and CAC were down for three. Concerns about global growth prospects continued to plague the markets. Crude oil prices attempted to stabilize following yesterday’s pullback, but energy stocks still were lower. Bank stocks also continued to get hammered due to concerns over troubled loans. The FTSE lost 1.0 percent, the CAC retreated 1.7 percent, the DAX declined 1.1 percent and the SMI tumbled 2.3 percent.
Deutsche Bank declined after the lender reassured investors on its finances, saying it has sufficient cash to pay its riskiest debts. Commerzbank also closed lower as did Société Générale, Crédit Agricole and BNP Paribas. RWE and E.ON were down as were ThyssenKrupp and Salzgitter. Automakers Volkswagen, BMW and Daimler also ended the session lower.
Technip and Total retreated. In London, tour operator TUI Group dropped after reporting a narrower first quarter loss on increased revenue, driven by strong performances in Northern Region and Cruises. Anglo American tumbled a day after its chief executive warned the mining industry will not revive anytime soon. Antofagasta, Glencore, BHP Billiton and Rio Tinto retreated. Standard Chartered, Barclays, Royal Bank of Scotland and Lloyds Banking Group and HSBC weakened. Royal Dutch Shell, BP, BG Group and Tullow Oil slid.
Germany’s December industrial production dropped unexpectedly. Output fell 1.2 percent on the month confounding expectations for an increase of 0.5 percent. German exports and imports set new highs in 2015, leading to the biggest ever trade surplus in December. Exports rose 6.4 percent and imports increased 4.2 percent. The trade surplus grew to a record €247.8 billion from the previous peak of €213.6 billion. The UK merchandise trade deficit narrowed in December despite exports falling for the third straight month, suggesting that weak trade dragged economic growth at the end of 2015.
Asia Pacific
Stocks in Japan, Australia and India tumbled once again Tuesday after US and European indices retreated during the Monday global market day. Once again, concerns over slowing global growth and speculation over the Federal Reserve raising rates further in March depressed investors.
The Nikkei tumbled 5.4 percent after the yen climbed to ¥114 to the US dollar and the highest level since November 2014. Banks Mizuho Financial, Mitsubishi UFJ Financial and Sumitomo Financial Group plummeted on renewed concerns that negative interest rates will hurt their profitability. Canon, Honda motor, Nissan Motor, Sharp Corp, Sony and Panasonic tumbled amid the sustained rise in yen. Daikin Industries retreated on a Nikkei report that it plans to acquire US-based air filtration company Flanders for about ¥50 billion. Energy explorer Inpex and JX Holdings were down. Japanese Finance Minister Taro Aso said the yen’s movement was “rough” and that the government will continue to closely monitor the situation in the currency market.
The S&P/ASX plunged 2.9 percent and the All Ordinaries lost 2.8 percent on concerns over the global market turmoil. The S&P/ASX finished at its lowest level since July 2013. The big four banks declined. Energy stocks Origin Energy and Santos were down along with BHP Billiton and Rio Tinto. Newcrest Mining and Evolution Mining rallied after gold prices advanced. The Sensex was down 1.1 percent with banking and tech stocks pacing declines.
Many of the regional markets, including China, Hong Kong, South Korea, Malaysia, Singapore and Taiwan were closed. China’s mainland markets are closed for the week while Hong Kong will reopen on Thursday.
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*
Japan posts January producer price index. The UK, France and Italy release December industrial production. In the US, Fed Chair Janet Yellen gives the first day of her semi-annual testimony to Congress’ House of Representatives Financial Services Committee.
*Note — all releases are listed in local time.