Global Markets Overview - 16 April 2013
U.S. STOCKS, BONDS
U.S. stocks suffered steep declines Monday as a plunge in prices for gold and other commodities unnerved investors. Worse-than-expected data on Chinese and U.S. economic growth fueled the selloff, which began during Asian hours and spread around the globe.
Late in the day, news of explosions at the site of the Boston Marathon added to the market's jitters. The Dow Jones Industrial Average posted its biggest one-day point decline since Nov. 7, 2012. For most of the day, the attention was on the dive in gold prices.
For the second-straight session, gold prices plummeted, losing $140.40 per ounce, or 9.4%, to finish at $1360.60. Monday's declines brought the metal's two-day losses to $203.70 per ounce, or 13%.
Traders reported talk of investors selling stocks to raise cash in response to losses in gold positions. However, traders said stock trading was smooth.
The Dow industrials gave up 265.86 points, or 1.8%, to close at 14599.20. The Standard & Poor's 500-stock index slipped 36.49 points, or 2.3%, to 1552.36, and the Nasdaq Composite fell 78.46 points, or 2.4%, to 3216.49.
Declines in commodity-linked sectors far outpaced losses in other sectors Monday. The materials and energy sectors of the S&P 500 fell 3.9% each.
Mining company Freeport-McMoRan Copper & Gold was the biggest percentage decliner in the S&P 500, shedding 8.3%. Data showing China's economy expanded 7.7% in the first quarter helped kick off the selling, as it fell short of expectations of 8% growth.
Data on Chinese industrial production for March also missed forecasts. China is the world's second-largest buyer of gold. Also weighing on stocks, the Federal Reserve Bank of New York reported manufacturing barely expanded in the region this month, as the business conditions index declined more than expected. Separately, home builders' confidence fell for the third-straight month, on expectations of a rise.
EUROPEAN STOCKS, BONDS
European stock markets posted sharp losses Monday, with miners leading the falls as gold prices tanked and data showed China's economy grew more slowly than expected in the first quarter.
The Stoxx Europe 600 index dropped 0.7% to close at 290.43. Mining firms led declines, keying off losses in Asia, after data showed Chinese first-quarter gross domestic product fell short of expectations.
Shares of Fresnillo PLC tumbled 15% in London, Polymetal International PLC gave up 13%, Randgold Resources Ltd. dropped 8.3% and Kazakhmys PLC lost 9%.
The U.K.'s FTSE 100 index dropped 0.6% to 6,343.60. Elsewhere, shares of drug maker Roche Holding AG rose 2.7% to 231.10 Swiss francs ($249), as J.P. Morgan Cazenove reiterated its overweight rating on the stock and lifted the target price to CHF280 from CHF270.
Other drug makers were also higher, with shares of Novartis AG up 1.8% and Sanofi SA 3% higher in Paris. France's CAC 40 index, however, lost 0.5% to 3,710.48. Accor SA slid 4.2% after Credit Suisse cut the hotels operator to underperform from outperform.
Oil giant Total SA slipped 1.7%, tracking oil prices lower. Shares of advertising firm Publicis Groupe SA fell 5.2% after it reported lower-than-expected organic revenue growth for the first quarter, and said 2013 is turning out to be a difficult year.
Germany's DAX 30 index closed 0.4% lower at 7,712.63, with shares of Commerzbank AG down 1.4% and Deutsche Bank AG 0.5% lower.
ASIA-PACIFIC STOCKS, BONDS
Markets across Asia slumped Monday after China unexpectedly said growth slowed in the first quarter, adding to concerns that Asia's biggest economy may be losing steam after an earlier recovery in the year.
Chinese stocks in Hong Kong were the big losers, with the Hang Seng China Enterprises Index falling 2% to 10440.76, outpacing a 1.4% decline on Hong Kong's Hang Seng Index to 21772.67.
In mainland China, the Shanghai Composite Index lost 1.1% to 2181.94. Disappointment regarding China's economy will add to the negative sentiment that has weighed on local stocks.
The Hang Seng China Enterprises Index is down 14.5% from its 2013 peak, which it reached on February 1. China's GDP rose 7.7% in the first quarter, below market expectations of an 8% expansion.
Other Chinese numbers also disappointed. Industrial output in March was up 8.9% on the year, falling short of an expected 10% rise. January to March non-rural fixed asset investment was up 20.9%, undershooting a 21.3% forecast.
In a sign that weakening economic recovery is affecting Chinese companies, Zoomlion Heavy Industry Science and Technology Co. fell 8.3% in Hong Kong after the construction machinery manufacturer issued a profit warning for the first quarter.
The company predicted a 60% to 80% on-year profit decline, citing a slow economic recovery. The Nikkei Stock Average lost 1.6% to 13275.66 in response to a firmer yen.
The effect of slower growth in China could also be felt in Japanese companies with a strong exposure to the country: industrial robotics company Fanuc Corp. lost 1.3% and construction equipment manufacturer Komatsu dropped 2.9%.
Sharp Corp. was in focus in Japan, surging 10.5% after a Saturday Nikkei report said that the electronics firm said that it decided to sell its entire 9.2% stake in Pioneer Corp., which also gained 4.3%.
The paper said that Sharp is looking for buyers to purchase its holding, which was taken as a sign the company is sorting out its finances. South Korea's Kospi Composite lost 0.2% to 1920.45.
COMMODITIES
Base metals on the London Metal Exchange closed mostly lower Monday, although the complex recovered a substantial part of the losses posted earlier in the session, with aluminum closing in positive territory.
At the close of open-outcry trading, LME copper was 2.8% below Friday's settlement, at $7,202 a metric ton. Earlier in the day, copper had hit its lowest price since October 2011, at $7,085/ton.
Tin is the most thinly traded metal, which tends to exacerbate its price swings, but at the close of open-outcry trading, it was down 4.6% from Friday's settlement at $21,000/ton.
Aluminum was the only metal to close higher on the day, up 0.7% at $1,866/ton. U.S. oil futures plunged to their lowest level all year, while the European benchmark neared $100 a barrel, after a disappointing reading on Chinese economic growth raised concerns over oil demand in the world's second-biggest consumer.
Light, sweet crude for May delivery settled $2.58, or 2.8%, lower at $88.71 a barrel on the New York Mercantile Exchange, marking the contract's lowest finish since Dec. 24.
May Brent crude on the ICE futures exchange settled $2.72, or 2.6%, lower at $100.39 a barrel, expiring at the close of trading. That's the lowest settle for a front-month contract since July 11.
Gold futures extended their losses to set a fresh 14-month low in electronic trading, after trading on the Comex floor finished for the day. Gold for April delivery, the front-month contract, slumped $163, or 10.9%, to trade at $1,338.00 a troy ounce on the Comex division of the New York Mercantile Exchange.
This was the lowest price since gold traded at $1,324.90 on Feb. 3, 2011. The most active contract, for June delivery, also set fresh intraday lows in after-market trade. June-delivery gold fell to $1,335.10 a troy ounce, down $166.30, or 11%, for the day. Reports compiled from MORRISON SECURITIES PTY. LTD.