Global Markets Overview - 05/08/2012
FROM MORRISON SECURITIES PTY. LTD:
U.S. STOCK MARKETS
The Dow industrials lost ground for the fourth session in a row amid concerns that elections in France and Greece could impede Europe's ability to deal with its sovereign debt problems.
The Dow Jones Industrial Average fell 29.74 points, or 0.2%, to 13008.53. The Standard & Poor's 500-stock index rose 0.48 point, or less than 0.1%, to 1369.58 and the Nasdaq Composite rose 1.42 points, less than 0.1%, to 2957.76.
Stocks opened lower after French voters elected Socialist Party candidate Franois Hollande, an opponent of spending cuts to address the euro zone's sovereign-debt issues, as their new president. In Greece, voters rejected austerity policies backed by the two incumbent parties, sparking concerns about the country's willingness to comply with the terms of its second bailout.
U.S. stocks bounced back from their steepest declines, tracking European markets, which mostly wiped out losses to trade higher. Financial-sector stocks rose the most, with Bank of America, up 2.8%, leading Dow components. Technology stocks like Hewlett-Packard, which fell 1.7%, led the decliners.
Walt Disney rose 2.1% after its latest superhero action film, "The Avengers," raked in more than $200 million in its weekend box-office debut.
American International Group slumped 3% after the U.S. government agreed to sell $5 billion of the insurer's stock at $30.50 a share, representing a 7.1% discount to Friday's closing price.
In U.S. economic news, consumer credit expanded in March at the fastest rate in more than a decade. Meanwhile, the jury deliberating claims by Oracle that Google infringed copyrights protecting Oracle's Java technology reached a mixed decision Monday that would leave Google liable for a relatively minimal amount of damages.
Oracle fell 1.7% while Google rose 2%. In other corporate news, Vertex Pharmaceuticals jumped 55% after a combination therapy that includes its drug Kalydeco improved lung function in adult cystic-fibrosis patients with a certain genetic mutation in a clinical trial.
EUROPEAN STOCK MARKETS
Most European stock markets rebounded Monday after initially tumbling in the wake of weekend election results in France and Greece, as gains for resources and construction companies boosted indexes, though political fallout continued to weigh on Greek stocks.
The Stoxx Europe 600 index rose 0.7% to close at 254.83, a marked reversal after losses of more than 0.5% earlier. French stocks initially lurched lower after Socialist challenger Francois Hollande ousted President Nicolas Sarkozy in Sunday's final election round, but shares eventually regained their footing as buyers stepped in.
The CAC 40 index ended 1.7% higher at 3,214.22. BNP Paribas SA rose 4.2% in Paris, while Societe Generale SA advanced 4%. Also higher, building companies Lafarge SA rose 4% and Vinci SA gained 3%, while steelmaker ArcelorMittal SA adding 2.5%. While many country-specific indexes shook off losses by the afternoon, Greek stocks remained deep in negative territory.
The ASE Composite index sank 6.7% to 643.87, with National Bank of Greece SA tumbling more than 8%. Greek government bonds sold off, pushing the yields on Greek 10-year government bonds up nearly 2.3 percentage points to 23.01%, according to Tradeweb. Voters angry over austerity measures punished the country's mainstream center-right New Democracy party and the center-left Socialists in parliamentary elections Sunday.
Worries a political vacuum created by a weak coalition could derail efforts to comply with terms of the country's second bailout stirred fears of further euro-zone chaos. In Germany, the DAX 30 index spent most of the day under pressure but managed to struggle back into positive territory by the close, up 0.1% at 6,569.48. Merkel faced a setback of her own Sunday as the parties that make up the federal ruling coalition lost control of the northern state of Schleswig-Holstein in a regional election. Elsewhere, Swiss drug maker Roche ranked among the day's worst heavyweight performers, falling 3.5% as the company said it had stopped a trial of heart-disease drug dalcetrapib after disappointing data.
ASIA-PACIFIC STOCK MARKETS
Stocks across Asia slumped, with indexes in Japan and Hong Kong recording their biggest daily falls this year, as investors fled to safety and pushed the euro down following European election results and renewed fears over the global economy.
Commodity companies were sharply lower as oil extended its slide on concern demand may ease as worries resurface about the European Union's ability to solve its sovereign debt woes.
Japan's Nikkei fell 2.78%, its largest percentage drop of the year, after reopening following two days of public holidays last week.
Companies holding exposure to Europe were especially hit, including Honda Motor, down 5.61%, and Nomura Holdings, down 7.35%. Investors fretted as Francois Hollande was elected French president, giving the country a Socialist leader, while Greek voters delivered a stinging rejection of the country's two incumbent parties.
Singapore's main index slumped 2.16% while Korea's Kospi was 1.64% lower. Chinese shares bucked the trend by finishing the day flat. India's Sensex ended 0.5% higher, rebounding after a 1.7% drop earlier in the trading day.
The government announced a delay in the implementation of a major tax proposal that was unpopular among foreign investors, providing an immediate boost to local shares.
Hong Kong's Hang Seng Index closed 2.61% lower, with nearly all its constituents down and companies with exposure to Europe underperforming.
London-headquartered HSBC fell 2.83% and fashion retailer Esprit Holdings, which is heavily dependent on Europe for sales, was off 4.32%. Japanese Finance Minister Jun Azumi hinted to reporters that the government might intervene in the currency markets in an attempt to halt the yen's rise.
COMMODITIES
The bruising sell-off in crude oil futures continued for a fourth day Monday, pushing U.S. crude prices below $98 as election results in France and Greece stoked fears of a widening economic slowdown that will cut oil demand.
Light, sweet crude oil for June delivery on the New York Mercantile Exchange settled 55 cents lower at $97.94, the lowest since Feb. 6. The contract has lost $8.29 a barrel, or 7.8%, in the last four days.
Prices hit an intraday low of $95.34 a barrel. ICE June Brent crude settled 2 cents lower, at $113.16 a barrel, the lowest since Feb. 2. Prices have dropped $6.50, or 5.4%, in the past four days.
Gold futures settled slightly lower, erasing some of the previous session's gains after concerns over election results in Greece and France kept investors cautious. The most actively traded contract, for June delivery, lost $6.10, or 0.4%, to settle at $1,639.10 a troy ounce on the Comex division of the New York Mercantile Exchange.