World Market Overview 08/03/2011
US markets
The technology sector led U.S. stocks lower Monday as an analyst downgrade weighed on the sector while investors continued to fret over the potential impact of rising oil prices. The Dow Jones Industrial Average dropped 108 points, or 0.9%, to 12062. Intel was among the measure's weakest components, off 2.1%, after Wells Fargo cut its view of the semiconductor sector to market weight from overweight for the first time in more than two years. Boeing also weighed with a 2.4% drop after its rival, European aircraft manufacturer Airbus, said it is confident about maintaining its share of global sales of commercial aircraft and expects a continued expansion in demand in the Asia-Pacific region.
[Get this delivered to your inbox for FREE. Subscribe to our daily Markets Newsletter.]
The Standard & Poor's 500-stock index shed 1.1% to 1306, with its technology and materials sectors leading the drop. The technology-heavy Nasdaq Composite got hit even harder, down 2% at 2730. Among the technology sector's decliners, JDS Uniphase dropped 8.6%, Applied Materials shed 5.9% and Advanced Micro Devices lost 4.8%. The sector was hurt not only by the analyst downgrade, but also by concerns over the impact on the sector from rising energy prices.
European markets
European equity markets finished lower Monday after a volatile trading session, as banks posted losses, while deal news boosted the luxury-goods sector. The Stoxx Europe 600 index slipped 0.4% to end at 280.73. One of the top gainers in the Stoxx 600 was German engines and power-trains maker Tognum AG, shares of which soared 23% after Daimler AG and Rolls-Royce Group PLC said they are in talks with it about a possible takeover of the firm. The blue-chip Euro Stoxx 50 index dropped 0.6%, led lower by banks. In France, Societe Generale SA fell 2% and Credit Agricole SA sank 1.8%. In Italy, Intesa Sanpaolo SpA slipped 1.7% and in Spain BBVA SA dropped 1.4%. The French CAC 40 index slipped 0.7% to 3,990.41. On the upside, shares of LVMH Moet Hennessy Louis Vuitton SA advanced 1.3% after the luxury goods group said it would buy Italy's Bulgari SpA. Shares of Bulgari soared more than 59% in Milan, boosting Italy's FTSE MIB index, which ended nearly unchanged. Other luxury goods stocks also posted solid gains. Burberry Group PLC rallied 3.6% in London, and Compagnie Financiere Richemont SA rose 2.2% in Zurich. Technology stocks were also strong, with shares of telecom-equipment maker Alcatel-Lucent SA rallying almost 4% in Paris. The stock has surged 13% this month on talk of a possible takeover bid from a Chinese company. Germany's DAX 30 index slipped 0.2% to 7,161.93, as Commerzbank AG fell 2.4%. The U.K.'s FTSE 100 index dropped 0.3% to 5,973.78.
Asian markets
Most major Asian markets declined Monday as rising oil prices fueled fears about inflation and economic growth, with Japanese and Indian stocks facing added pressure from political setbacks to the respective ruling governments. Japan's Nikkei Stock Average tumbled 1.8%, South Korea's Kospi lost 1.2%, Hong Kong's Hang Seng Index fell 0.4%, Taiwan's Taiex fell 0.8% and India's Sensex sank 1.4%. Chinese shares posted solid gains on the back of supportive economic policies, sending the benchmark Shanghai Composite Index up 1.8% to a fresh 2011 closing high. Across the region, several energy shares outperformed stock benchmarks in their respective countries, with Cnooc rising 1.9% and PetroChina Co. adding 0.4% in Hong Kong and Inpex Corp. advancing 1.6% in Tokyo. But most other sectors lost ground on curtailed appetite for equities, with airlines remaining among the badly hit. Korean Air Lines Co. fell 3.1%, while Cathay Pacific Airways dropped 3.5% in Hong Kong. The fall in Tokyo was aggravated by domestic political turmoil, with Foreign Minister Seiji Maehara one of the country's more popular politicians resigning Sunday over illegal political donations from a foreign national. The minister's departure further complicates Prime Minister Naoto Kan's nine month grip on power, given his Democratic Party led government already faces gridlock in the opposition-controlled Upper House over budget-related bills. Exporters were hit especially hard, with Canon Inc. sliding 2.4% and Honda Motor Co. losing 3.1%, while Nissan Motor Co. shed 2.6%.
Base metals
Copper closed at its lowest level for a week and a half on the London Metal Exchange Monday, weighed down by a cocktail of bearish geopolitical and economic factors that show little sign of easing, market players said. Escalating tensions in Libya, a rising oil price and a fresh reminder of sovereign debt issues in the euro zone conspired to bring the red metal to an ungainly close, 4% down on the previous session. The rest of the base metal complex fell in copper's wake, with nickel and zinc both hitting their lowest levels this year. Moody's Investors Service cut Greece's credit rating by three grades to B1 from Ba1 and kept its outlook on the rating negative Monday, lowering the European sovereign even deeper into junk-grade territory. As the situation in Libya begins to resemble a civil war, crude oil futures hit their highest levels for over two years Monday, casting further doubt over the ability of major economies to shake off rising inflation without the help of monetary tightening measures. Oil futures advanced Monday as violence continued near Libya's oil facilities and the prospect of a quick end to the conflict appeared increasingly remote. Light, sweet crude for April delivery settled $1.02 higher at $105.44 a barrel on the New York Mercantile Exchange. Prices earlier rose to $106.95 a barrel, their highest since Sept. 26, 2008. With little end to the conflict in sight, market participants girded for a long-term disruption to Libya's oil supplies. Fighting in the North African country continued through the weekend at the important oil towns of Brega and Ras Lanuf, the site of much violence between pro-Gadhafi forces and rebels in recent weeks. Gold futures inched up while silver vaulted to a fresh 31-year high as safe-harbor demand kept prices buoyed. The most actively traded gold contract, for April delivery, settled up 0.4%, or $5.90, at $1,434.50 a troy ounce on the Comex division of the New York Mercantile Exchange. Gold ended shy of its record settlement price of $1,437.70, set March 2, but set a fresh intraday high, hitting $1,445.70 a troy ounce as Comex floor trading opened. The thinly traded March delivery gold contract ended up 0.4%, or $5.90, at $1,434.10 a troy ounce.
More from Global Markets:
Newsletter: To receive Global Markets update, sign up here