Global Markets Overview - 08/29/2012
U.S. STOCK MARKETS
Stocks ended mostly lower Tuesday as an upbeat reading on U.S. housing prices was offset by a dour report on consumer confidence.
The Dow Jones Industrial Average slipped 21.68 points, or 0.17%, to 13102.99. The blue-chip benchmark fell for the sixth time in seven sessions, a choppy stretch during which the Dow has fallen 172 points, or 1.3%.
The Standard & Poor's 500-stock index edged down 1.14 points, or 0.08%, to 1409.30. The Nasdaq Composite Index gained 3.95 points, or 0.13%, to 3077.14.
Energy stocks gained, moving in tandem with crude-oil prices as Isaac, upgraded to a Category-One hurricane, gathered strength as it approached oil rigs and refineries along the Gulf Coast. Chevron rose as the Dow's second-best performer.
Lexmark International soared after the company said it would cut 1,700 jobs, or roughly 13% of its workforce, as part of a restructuring for the printer marker that includes an exit from the inkjet-hardware business.
KLA-Tencor, which makes systems that monitor microchip production, was among the biggest decliners in the S&P 500 after analysts at Deutsche Bank cut the stock to sell from hold, warning of a slowing business environment.
Investors digested a string of economic news. Home prices rose during June across major metropolitan areas for the first time since 2010, according to S&P/Case-Shiller home-price indexes.
But consumer confidence in August fell short of expectations, dropping to its lowest reading since 2011, according to the Conference Board.
Separately, a report on manufacturers in the Central Atlantic region saw a contraction in economic activity this month, though at a slower pace than in July. Investors are keenly awaiting Federal Reserve Chairman Ben Bernanke's speech in Jackson Hole on Friday for signals that the U.S. central bank could undertake additional measures to stimulate the economy.
EUROPEAN STOCK MARKETS
European stock markets suffered broad-based losses Tuesday, after Spain's Catalonia region said it would ask for a bailout and as investors fretted about the slowdown in global economic growth after Japan lowered its growth forecast.
The Stoxx Europe 600 index lost 0.7% to close at 267.32. Drug makers fell after J.P. Morgan Cazenove cut the sector to underweight from neutral.
Novartis AG lost 1.1% and Roche Holding AG lost 0.7%. Nokia Corp. dropped 7.8%, pulling back from a 7.7% gain Monday, when an Apple Inc. court victory helped the Finnish firm's shares to rally. In the other direction, Vestas Wind Systems AS surged 18.5% after the wind-turbine maker confirmed it's in talks with Mitsubishi Heavy Industries on a potential strategic cooperation.
Spanish stocks tumbled after Catalonia, Spain's most indebted region, said it would ask for 5.02 billion euros ($6.28 billion) in financial aid as it struggles to pay for services such as hospitals and schools.
The IBEX 35 index fell 0.9% to 7,333.50; Santander SA nudged 0.8% lower. FTSE MIB index fell 0.1% to 14,993.01. Italy succeeded in selling a maximum targeted EUR3.75 billion of government debt at mostly lower borrowing costs.
Heavyweight miners were among notable decliners in Europe, tracking metals prices lower. Rio Tinto PLC fell 1.7%, Vedanta Resources PLC lost 2.2% and Anglo American inched 1% lower.
Security firm G4S PLC dropped 2% after it confirmed it booked a 50 million pound ($78.92 million) loss on its Olympic Games contract. The losses weighed on the FTSE 100 index, which closed marginally lower at 5,775.71.
In France, steelmaker ArcelorMittal lost 2.7%, weighing on the CAC 40 index. The benchmark index fell 0.9% to 3,431.55. German stocks were lower overall despite better-than-expected consumer-sentiment data.
The DAX 30 index lost 0.6% to 7,002.68. Deutsche Lufthansa fell 0.8%. German labor union UFO said it was preparing for strikes after negotiations with the airline broke down.
ASIA-PACIFIC STOCK MARKETS
Asian shares were mixed Tuesday as markets waited for clearer signals from the Federal Reserve at Friday's annual Jackson Hole, Wyo., symposium over whether it will provide more stimulus.
In China, the Shanghai Composite ended up 0.9% at 2073.15, after trading flat for much of the session. Blue chips followed Baoshan Iron & Steel Co. higher, as the steelmaker climbed 10% after it announced a 5 billion yuan share buyback.
Other state-owned companies gained, with PetroChina and China Petroleum & Chemical Corp. up 2.1% and 5.4%, respectively, on hopes they will announce similar plans, analysts said.
The positive outcome for the A-share market provided some support in Hong Kong, where the Hang Seng Index ended up less than 0.1% at 19,811.80.
There were also some poor earnings: China Southern Airlines dropped 2.8% after its first-half net profit sank 85% due to high fuel prices and losses on foreign exchange.
The Nikkei was down 0.6% at 9033.29, as the dollar weakened against the yen after the Japanese government cut its view of the economy in August for the first time in 10 months, as slowing exports hindered production and consumer spending failed to expand.
Aozora Bank, however, leaped 13.8% after it announced a buyback of 330 million shares approximately 20% of shares issued--and set a dividend payout ratio of 40%.
South Korea's Kospi was less than 0.1% lower at 1916.33 as the index's single largest constituent, Samsung Electronics, bounced back 1.3% from its heavy falls Monday. Hyundai Motor was down 1.4% as its union plans to strike for three additional days this week, increasing concerns that lengthy industrial action could affect the car maker's earnings in the second half.
COMMODITIES
Base metals closed mostly moderately lower on the London Metal Exchange Tuesday, with a weakening dollar helping prices scale back some of the losses made earlier in the session as investors tracked currency moves for direction while awaiting key news from the U.S. Federal Reserve later in the week.
At the close, LME three-month copper was 0.4% lower from Friday's close at $7,605 a metric ton. Lead was in positive territory, gaining 0.3% to $1,975/ton.
Crude-oil futures ended higher Tuesday, breaking a three-day losing streak, as traders grew concerned about Hurricane Isaac's impact on oil production in the Gulf of Mexico.
Gasoline futures meanwhile gave back some of their prior-day gains. Front-month oil futures for delivery on the New York Mercantile Exchange settled at $96.33 a barrel, up 86 cents or 0.9% after a report dismissed the chance of an emergency oil stockpile release. Gasoline futures, which jumped 2.5% Monday, closed at $3.126 per gallon, down 2.87 cents, or 0.9%.
Brent futures settled at $112.58, up 32 cents. Gold futures pared their losses on data showing a sharp decline in U.S. consumer confidence but settled lower amid renewed concerns about Europe. The most-actively traded contract, for December delivery, fell $5.90, or 0.4%, to $1,669.70 a troy ounce on the Comex division of the New York Mercantile Exchange. Compiled from MORRISON SECURITIES PTY.LTD.