On 11 February, 2016 – Stocks continue to sink

Investors continue to worry about economic growth and tumbling oil prices. 
United States
Bank shares dragged US stocks lower Thursday on concerns the slowing global economy will continue to pressure interest rates. However, energy shares helped the market pare losses on a report that OPEC may move to cut oil production. The Dow Jones industrials were down 1.6 percent, the S&P declined 1.2 percent and Nasdaq lost 0.4 percent.
Declines in banks and other financial companies led a broad slide in stocks, but the market recovered somewhat from even steeper losses earlier in the day. The slump reflected heightened concerns about global economic weakness, even as Fed Chair Janet Yellen reiterated her confidence in the US economy. Investors are increasingly worried that the mounting market turmoil could put a brake on the global economy when it is already struggling with a host of issues such as China’s slowdown, low inflation and plunging energy markets.
Boeing retreated after a report that the Securities and Exchange Commission was investigating it over accounting practices. The report came a day after Boeing announced plans to eliminate an unspecified number of commercial airplane jobs as part of a cost-cutting effort. Cisco Systems rallied a day after the company reported better than expected quarterly results and announced a stock buyback plan and a dividend increase.
Yellen gave her second day of Congressional testimony, this time to the Senate Banking Committee. Just two months after the Fed started raising rates for the first time since the financial crisis, Ms Yellen spent several minutes assuring the committee that the Fed wasn’t planning to reverse course and cut rates. She said the Fed still planned to raise rates gradually. The Fed will publish a new round of economic forecasts in March as it does four times a year and will update markets on the FOMC’s thinking on the outlook and the risks. Asked about the possibility of another recession, she responded that anything is possible but “expansions don’t die of old age.” She also said she still expected lower oil prices to lift growth. The magnitude of the decline took the Fed by surprise. She said Fed policy was still headed in the same direction — The question is not whether to raise rates, but when.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing jumped US$51.00 to US$1,041.00. Copper futures were down 0.7 percent to US$2.01. WTI spot crude was down 32 US cents to US$27.13. Dated Brent spot crude was up 31 US cents to US$31.15. The US dollar was up against the pound and the Canadian and Australian dollars. It was unchanged against the Swiss franc. However, it declined against the yen and euro. The Dollar Index was down 0.3 percent. The yield on US Treasury 30 year bond was down 3 basis points to 2.50 percent while the yield on the 10 year note declined 6 basis points to 1.64 percent.
Europe
European stocks retreated Thursday ending back near 2 1/2 year lows after they snapped a 7-session losing streak Wednesday. Declines in Asian markets and continued weakness in oil prices had investors in a negative mood. Concerns about slowing global growth also played a role, as Federal Reserve Chair Janet Yellen warned of several risks facing the economy in her testimony before Congress. The FTSE dropped 2.4 percent, the CAC plummeted 4.1 percent, the DAX retreated 2.9 percent and the SMI lost 3.0 percent.
Sweden’s Riksbank cuts its key interest rates deeper into negative territory Thursday in another attempt to bring its currency the krona down and push inflation to the 2 percent target. The bank also signaled that it was willing to take rates lower from the current negative levels, among other steps such as an extension of government bond purchases and foreign exchange market interventions if the krona appreciates quickly. The Executive Board of the Riksbank unexpectedly decided to cut the repo rate by 0.15 percentage points to minus 0.50 percent. The bank was expected to keep its rate unchanged at minus 0.35 percent.
Bank stocks were among the weakest Thursday, despite their brief recovery yesterday. A profit warning from Société Générale did not help matters. Disappointing results from Rio Tinto weighed on mining stocks. However, gold companies were among the best performing stocks, as investors fled to safe havens. Deutsche Bank tumbled after rallying sharply Wednesday on reports it is considering buying back several billion euros of its debt to help ease investor concerns about its funds. Commerzbank also sank. BASF declined after paints and coatings maker Akzo Nobel confirmed that it is in talks with the German chemical company regarding a potential purchase of the latter’s industrial coatings business. Metro weakened after the department store operator reiterated the group’s forecast after reporting earnings for the holiday season quarter that missed estimates. RWE and E.ON were down.
Total declined after it reported a 20 percent increase in annual net profit and unveiled further cost reductions and asset sales in 2016 to enable it to weather a slump in crude prices. Technip also closed down. Rio Tinto was down after the mining giant swung to an annual loss and scrapped its progressive dividend policy citing challenging market conditions. Glencore declined after the company said its own sourced copper production for the full year was down 3 percent to 1.50 million tonnes, reflecting the suspension of processing operations at Katanga and a significant curtailment at Mopani. Randgold Resources and Fresnillo gained. In the UK, Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered tumbled.
Asia Pacific
Most Asian stock markets that were open took a pounding Thursday as markets in Hong Kong and South Korea resumed trading following their Lunar New Year holidays. Australian shares gained on some bargain hunting after sliding into bear territory on Wednesday. Markets in mainland China, Japan and Taiwan were shut for holidays. Investor sentiment remained shaky as oil’s recovery proved short lived. Investors continued to parse the first day of Federal Reserve Chair Janet Yellen’s Congressional testimony which was completed today after markets here were closed.
The Hang Seng fell 3.8 percent as dealers returning from the holiday played catch-up with the recent selloff across global equity markets. The Kospi also plummeted and was down 2.9 percent. Seoul shares suffered their biggest fall in more than 3-1/2 years on worries about the global market turmoil and increasing geopolitical tensions following North Korea’s launch of a long-range ballistic missile on February 7.
The S&P/ASX was up 1.0 percent after tumbling into bear territory on Wednesday. The All Ordinaries added 0.9 percent. Cochlear soared after the hearing implant supplier increased its dividend and raised its full-year earnings outlook after reporting a 32 percent increase in first-half profit. Banks ANZ, Nab and Westpac advanced. Rio Tinto dropped before announcing its annual results later in the day. BHP Billiton and Fortescue Metals Group retreated. In the energy sector, Origin Energy declined while Santos and Woodside Petroleum advanced. Gold Miner Evolution Mining climbed as gold surged to its highest level in eight-and-a-half months. The Sensex lost 3.4 percent.
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*
First estimates of fourth quarter 2015 gross domestic product will be released for Germany, Italy and the Eurozone. The Eurozone will also post December industrial production. India reports January consumer prices and December industrial production. In the US, January retail sales and import/export prices along with December business inventories will be posted. First estimate of February consumer sentiment will also be reported.
*Note — all releases are listed in local time.