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| Subject: World Market Report Help marking its largest one-day point and percentage drop since July 2. | |
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Author: US Stocks Lower In Broad Sell-Off |
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Date Posted: 15:29:39 08/18/09 Tue World Market Report Help US Stocks Lower In Broad Sell-Off Severe stock market declines overseas restoked economic fears domestically on Monday as a sharp decline for a broad spectrum of energy and materials companies was coupled with a sell-off for financials, including Bank of America, and an earnings-driven decline for Lowe's. Few sectors and market capitalisation sizes were immune from the vast stock market dip. Setting off the declines in the US, China's Shanghai Composite Index posted its biggest single-day percentage drop since November. Investors have touted China as further along the recovery cycle, which had helped metals and other commodities stocks pace the broad market rally recently. But on Monday, economic data in China and a steep decline in commodities prices had investors looking for safer havens. Overall, the Dow Jones Industrial Average closed down 186.06 points (2%) at 9,135.34, marking its largest one-day point and percentage drop since July 2. Within the index, aluminium maker Alcoa was the leading decliner, off 86 cents (6.5%) to $12.41. Also sliding among basic-materials stocks was coal company Peabody Energy, off $2.56 (7.1%) to $33.74; US Steel, down $3.82 (8.3%) to $42.32; and Dow Chemical, which lost $1.22 (5.5%) to $20.91. Among other indexes, the Standard & Poor's 500 slid 24.36 (2.43%) to 979.73, moving back below the psychologically important level of 1,000. The index also marked its largest point and percentage loss since July 2, but remains up 45% from its 12-year closing low hit on March 9. The Nasdaq Composite lost 54.68 (2.75%) to 1,930.84, and has fallen 78.5 points in the last two sessions. After materials stocks had paced much of the morning weakness, banks were the market's worst-performing sector late in the day's trading. Leading the declines was a broad spectrum of financials as Bank of America fell 83 cents (4.8%) to $16.56, while insurer Lincoln National lost $2.03 (8.4%) to $22.22. Consumer companies didn't fare much better as concerns have continued to grow about US consumers in the face of a still-weak labour market. Weighing on that sector, Lowe's reported its fiscal second-quarter earnings fell 19% on continued weak demand, sending shares down $2.36 (10%) to $20.47. Competitor and the world's largest home-improvement retailer, Home Depot, also traded lower as Warren Buffett disclosed he trimmed his stake in the company in the past quarter. Home Depot closed down $1.03 (3.8%) at $26.11. In addition, CarMax fell 64 cents (3.8%) to $16.03, as Buffett reduced his stake in the used-car superstore chain to nine million shares from 12 million shares as of June 30. Freeport-McMoRan Copper & Gold slid $4.29 (6.7%) to $59.36, as the Congolese government detained three company employees in association with alleged misappropriation of public funds. While the government hasn't yet provided any evidence of wrongdoing, Freeport-McMoRan said it was cooperating with the Congolese inquiry as well as conducting its own internal investigation. Aiming to strengthen its capital base following the sizable acquisition of Colonial Bank, BB&T said it plans to issue $750m in common stock. The Winston-Salem, N.C., bank closed down $1.80 (6.4%) at $26.43. Illinois Tool Works' revenue fell 24% during the three months ended July 31, though the diversified manufacturer saw modest improvement from the second quarter as demand showed more signs of stabilising. Shares of the firm closed down $1.11 (2.7%) at $40.18. For Australian ADRs listed on the NYSE, BHP Billiton shed $2.75 (4.37%) to US$60.20, Rio Tinto Plc lost $9.89 (6.25%) to US$148.40, ResMed dipped 43 cents (0.94%) to US$45.18, Telstra Corporation declined 29 cents (1.94%) to US$14.63, Telecom Corporation of NZ slid 19 cents (2.08%) to US$8.95 and Westpac slipped $4.09 (4.04%) to US$97.15. In economic news, the National Association of Home Builders housing market index rose one point to 18 in August, a level not seen since June 2008. But the index is well below the point at which expectations for strong sales outweigh those for poor sales. Conditions for New York manufacturers improved for the first time in more than a year in August, bolstering hopes the economy is emerging from the recession. The New York Fed's Empire State business conditions index climbed 13 points to its highest level since November 2007. Treasury prices rallied smartly on Monday as US stock prices joined a global sell-off. At 7:45 AM (AEST), the 10-year Treasury note yield was 3.47% and the five year yield was 2.41%. European shares fell sharply on Monday, paced by banks and miners, as worries about the speed and shape of an economic recovery shook investor confidence. The pan-European Dow Jones Stoxx 600 index fell 2% to 224.21, down for the second session in four and trading back at levels not seen since the end of July. On a regional level, the UK FTSE 100 index dropped 1.5% to 4,645.01, the German DAX index fell 2% to 5,201.61 and the French CAC-40 index skidded 2.2% to 3,419.69. Banks were among the worst performers in Europe, with Societe Generale down 2.1%, UniCredit shares down 3.8% and KBC shares down 4.4%. Swedish lender Swedbank fell 0.8% in Stockholm after it said it will sell 15bn Swedish kronor (US$2.07bn) of new shares to strengthen its capital position and help reduce its dependence on government support. Miners also fell, with BHP Billiton shares down 3.2% and Xstrata shares down 5.5%. In the auto sector, Volkswagen shares dropped 9.9%, extending steep losses from Friday. Volkswagen agreed to buy a 42% stake in Porsche's core sports car business as the precursor to a full merger in 2011. Porsche shares rose 3.1%. Volkswagen's preference shares were downgraded to neutral from overweight, with one broker saying it believes the merger plan limits short-term upside. Elsewhere in the sector, shares of Daimler declined 3.3% and BMW shares down 2.3%. Swedish retailer Hennes & Mauritz fell 2.7% after its July same-store sales dropped 3%. Total sales across all its stores in local currencies rose 7%. Shanghai stocks dropped 5.8% on Monday, suffering their biggest percentage drop so far this year, as lower commodity prices, persistent worries over tightening in bank loans and weak economic data damped investor sentiment. Hong Kong shares were also weighed down by the performance as well as a steep fall in US stock futures and commodity prices. In Tokyo, exporters were dragged down by the yen's strength as risk-averse investors bought the low-yielding currency in search of a perceived safe haven. China's Shanghai Composite index posted its biggest percentage drop since November and ended at 2,870.63, its first close below 3,000 since the end of June. Hong Kong's Hang Seng Index skidded 3.6% to end at 20,137.65, led by a slump in China-related stocks. Japan's Nikkei Stock Average of 225 companies ended down 3.1%. In Tokyo, data showing Japan's second-quarter gross domestic product registered its first quarterly growth in five quarters, did little for the Tokyo markets. GDP grew 0.9% from the quarter before, compared with a 1.0% rise tipped in a poll of economists. New Zealand shares ended weaker as investor sentiment was hurt by weak offshore markets and some disappointing company results. The benchmark NZX-50 ended down 2.1% or 65 points at 3,086.09. Base metals on the London Metal Exchange fell sharply because of rising risk aversion, a decline in equity markets and a stronger US dollar. Aluminium rose $5 (0.25%) to $1,980 while copper fell $120 (1.93%) to $6,095 and nickel weakened $150 (0.77%) to $19,400. Zinc dropped $30 (1.64%) to $1,800 and lead shed $40 (2.16%) to $1,810. Comex copper was last quoted at 276.80 US cents per pound. Gold and other precious metals fell sharply in response to a return of risk aversion, with weakness in equities and oil and a sharp bounce in the US dollar. Spot gold was last quoted at $933.95. Comex gold futures slid $12.90 (1.36%) to $935.80. Spot silver was last quoted at $13.97. Crude oil prices fell on continued concerns over high stockpiles and weak demand in the world's biggest oil consumer. West Texas Intermediate was last quoted at US$66.75 per barrel. The US dollar rallied broadly on Monday, gaining against all its major rivals except the yen as the global investing climate took a marked turn toward risk aversion. At 08:05 a.m. (AET) the US dollar was quoted at 0.7105 euros, 94.47 yen, 1.219 AUD and 61.22 pence. IMPORTANT NOTICE: The recommendations on this page are extracted from full research reports produced by Aspect Huntley. These reports are not currently available on the Westpac Broking website. The information on this page is general information only and has been prepared without taking into account your individual objectives, financial situation or needs. Before making an investment decision, you should consider the appropriateness of the information in any relevant offer document, having regard to those matters, and obtain professional advice, such as from a tax expert or financial planner, to take into account your particular investment objectives, financial situation and needs. No responsibility is taken for any or all liability which may arise in any way out of the provision to, or use by, you of this information or any other person, except to the extent that liability under any applicable law cannot be excluded. Westpac Broking may receive a commission on any product you acquire or trade through Westpac Broking. Disclaimer - Important © Copyright Huntleys' Investment Information Pty. Limited (HII) (a wholly owned subsidiary of Aspect Huntley Pty Limited), 2004. All rights reserved. Australian Financial Services Licence no. 240892. No material may be reproduced, except as allowed by the Copyright Act, without the prior written approval of HII. Some of the material provided by HII is copyright and is published under licence from ASX Operations Pty Limited ACN 004 523 782 ("ASXO"). Consensus forecast data is copyright Thomson Financial. DISCLAIMER: While the above-mentioned advice and information are based on information, which HII consider reliable, its accuracy and completeness cannot be guaranteed. This report is made without consideration of any specific clients investment objectives, financial situation or particular needs. Those acting upon such information do so entirely at their own risk. For a copy of HII's Financial Services Guide please go to http://www.aspecthuntley.com.au/FSG or phone HII on (02) 9256 8000 to request a copy. DISCLOSURE: The directors and associated persons or entities of HII may have an interest in the securities discussed in this report. [ Next Thread | Previous Thread | Next Message | Previous Message ] |
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