Global Markets Overview 03/29/2012
US Markets
U.S. stocks were dragged lower as commodities tumbled and investors considered disappointing U.S. and European economic data and weakness in overseas markets. The Dow Jones Industrial Average fell 98 points, or 0.7%, to 13100 in recent trading, while the Standard & Poor's 500-stock index lost 11 points, or 0.8%, to 1402, and the Nasdaq Composite lost 22 points, or 0.7%, to 3098. Materials and energy stocks declined the most on a weak day for commodity prices. Alcoa, Caterpillar and United Technologies three companies exposed to swings in the global economic cycle led the Dow components lower. These firms were also hurt by a report showing U.S. durable-goods orders rose 2.2% in February, rebounding from a weak January reading but coming in below expectations of a 3% rise. Oil companies Exxon Mobil and Chevron also fell after a weekly report on crude-oil inventories showed U.S. stockpiles rising a much larger than expected 7.1 million barrels. Separately, a French official said France is considering whether to release oil from its strategic reserves. Telecommunications companies declined after RBC Capital Markets cut its rating on Verizon Communications to sector perform from outperform and cut its earnings estimates for AT&T. Both stocks were among the Dow's biggest decliners. Health-care stocks were also in focus as the Supreme Court wrapped up a third day of oral arguments on President Barack Obama's health-care overhaul. Merck and Pfizer both declined. The decline puts the Dow on track for its fifth drop in seven days. Some traders also said many in the market were tweaking positions ahead of the end of the first quarter, which comes Friday.
European Markets
Banks and miners led a decline in European stocks Wednesday as economic worries on both sides of the Atlantic weighed on sentiment. The Stoxx Europe 600 index ended down 1.1% at 264.10. Stocks experienced choppy price action throughout most of the session, but were sent sharply lower after U.S. durable-goods orders came in below expectations. Spain's IBEX 35 index underperformed Europe's national indexes, falling 2% to 7980.80, as the country's debt problems remain an issue. Elsewhere, the FTSE 100 index fell 1% to 5808.99, the French CAC 40 index fell 1.1% to 3430.15 and Germany's DAX 30 index settled 1.1% lower at 6998.80. Banks were big losers. In Madrid, Banco de Sabadell fell 3%, Bankia slid 3.6% and Banco Santander lost 1.9%. In London, Lloyds Banking Group fell 1.1% and Barclays dropped 2.3%. In Paris, Societe Generale lost 2.9%, Credit Agricole slid 2.8% and BNP Paribas was off 1.3%. Insurance stocks took a hit after Lloyd's of London, the U.K.'s 324 year old insurance and reinsurance market, posted its first loss in six years. RSA Insurance Group fell 7.6% and Prudential PLC declined 3.6%. Resources stocks were also lower as oil and metals prices inched down. Fresnillo gave up 4.1%, Vedanta Resources shed 5.5% and Anglo American declined 3.9%. Evraz fell 5.5% after reporting a 4% decline in 2011 profit and missing analysts' expectations. Among oil companies, BG Group gave up 1.7% and BP lost 0.7%. Losses continued for Total, which fell 1.4% on ongoing concerns about a gas leak in the North Sea, which started Sunday.
Asian Markets
Asian stock markets ended mostly lower Wednesday, with the Shanghai benchmark suffering this year's worst percentage loss so far, led by mining and metal stocks. On mainland bourses, the Shanghai Composite tumbled 2.7%, its worst loss since late November 2011, while the Shenzhen Composite slumped 4.1%. Hong Kong's Hang Seng Index lost 0.8%. Elsewhere, Japan's Nikkei Stock Average fell 0.7% and South Korea's Kospi lost 0.4%, giving back some of gains recorded the previous day on hopes U.S. monetary policy will remain accommodative. In the opposite direction, Taiwan's Taiex added 0.1%. The losses on mainland bourses came a day after data from the National Bureau of Statistics showed a 5.2% drop in profits for China's largest industrial groups during the first two months of the year. Mining and metal stocks were hit hard. Yanzhou Coal Mining fell 5.6% and Jiangxi Copper fell 5.5% in Shanghai, while Yunnan Tin shed 7.7% and Hebei Iron & Steel declined 4.2% in Shenzhen. The losses also weighed in Hong Kong, where Jiangxi lost 2.4% and Aluminum Corp. of China gave up 2.1%. Jiangxi's losses came after it reported a 33% increase in annual profit, but missed analyst forecasts. Also weighed by weak earnings reports, Gome Electrical Appliances Holding slumped 21.2% after the appliance retailer said Tuesday that higher costs limited its 2011 net-profit rise to just over 6.0%, also falling short of expectations. The performance earned a stock downgrade to underperform from outperform from Macquarie. In Tokyo, shares of Sharp Corp. soared by the day's 16.3% limit following reports that Hon Hai Precision Industry Co. is buying a 10% stake in the Japanese firm for Y66.91 billion. Shares of Hon Hai jumped 4.6% in Taipei, also aided by better-than-expected quarterly results announced Tuesday.
Commodities
Base metals closed mostly lower on the London Metal Exchange Wednesday as a strengthening dollar and concern over global growth weighed on sentiment. Leading the losses was flagship three-month copper, down 2.2% at $8,348 a metric ton at the PM kerb close. Aluminum closed 1.2% lower at $2,169/ton. Crude-oil futures fell Wednesday, hit by a surprise build in U.S. oil inventories and the renewed potential for a strategic oil reserve release. Light, sweet crude oil for May delivery settled $1.92, or 1.8%, lower at $105.41 a barrel on the New York Mercantile Exchange, after dipping below $105 a barrel earlier in the session. Brent crude oil on the ICE futures exchange was $1.10 lower at $124.16 a barrel. Crude-oil prices slumped after the Energy Information Administration reported that U.S. oil stockpiles rose 7.1 million barrels last week to a seven-month high. Analysts had expected a more modest 2.2 million-barrel increase. Gold futures slumped on signs of weak physical demand for the metal and selling by traders who bet the market was due for a pullback a day after failing to top $1,700 a troy ounce. The most actively traded contract, for April delivery, fell $27, or 1.6%, to settle at $1,657.90 a troy ounce on the Comex division of the New York Mercantile Exchange.