World Market Overview
The US stock market edged lower Wednesday on news that orders for big ticket items sank in June. The Dow fell 39.81 points (0.38%) to 10,497.88 in final trades, after a four day winning streak.
The tech-rich Nasdaq composite index slipped 23.69 points (1.04%) to 2,264.56 while the broader S&P 500 index lost 7.72 points (0.69%) to a provisional close of 1,106.12.
Sentiment was soured by news that orders for big ticket items in the United States suffered the biggest drop in almost a year in June, on weaker demand for airplanes and electronic goods.
New orders for manufactured durable goods items such as planes, cars, refrigerators and computers decreased by $2 billion, or 1%, from the previous month, the Commerce Department said.
That trend was underlined before the opening bell when US defense and aerospace firm Boeing announced a sharp 21 percent drop in second quarter profits, amid falling revenue and fewer deliveries of aircraft.
European market
European stocks closed marginally lower Wednesday in a lackluster session, while disappointing U.S. economic data capped any attempts to push shares higher. The pan-European Stoxx 600 index ended down 0.3% at 257.21.
The U.K.'s FTSE 100 closed down 0.9% at 5319.68 and Germany's DAX fell 0.5% to 6178.94. But France's CAC-40 managed to eke a small gain, closing up 0.1% at 3670.36.
At the time of Europe's close, the Dow Jones Industrials Average was 0.2% lower at 10,514.16. European indexes started the session higher, led by bank stocks.
Starting with the release of stress test results last Friday, the sector has enjoyed a string of good news, including strong earnings from UBS and Deutsche Bank Tuesday as well as less severe liquidity and capital rules coming out of the Basel III bank reform negotiations late Monday. But the bank rally stalled late in the day and the Stoxx 600 banks index ended the session flat.
Over the past month, the bank index is up nearly 12%. Meanwhile, U.S. durable goods data were weaker than expected in an otherwise light day for economic news. Durable goods orders fell 1% in June, while consensus estimates forecast a 0.7% advance.
On Thursday, investors will be eyeing German unemployment figures, euro zone confidence indicators and U.S. initial jobless claims. In major market action: Portugal's PSI-20 stock index gained 1% after Portugal Telecom agreed to sell its stake in Brazil's Vivo Participacoes to Spain's Telefonica for EUR7.5 billion.
Shares of Telefonica rose 0.7% after the deal for Vivo was announced. Portugal Telecom gained 2.8%.
Also, Banco Espirito Santo rallied 3.6% after the Portuguese government sold more bonds than planned at an auction.
PSA Peugeot Citroen swung to a first half net profit of EUR680 million, but management warned that the automotive division is expected to be close to breakeven in the second half.
Shares of the car maker dropped 4.1%. Steel giant ArcelorMittal, whose shares fell 2.1%, said that earnings in the coming months will be hit by a slowdown in demand from China. French banks added to recent gains. Shares of BNP Paribas gained 2.2% and Societe Generale added 1.8%.
Notable earnings related advancers included: Deutsche Boerse, which ended up 4.1%. Second quarter net profit at the German exchange operator dipped to EUR160.8 million, but comfortably exceeded analyst forecasts for a profit of EUR144 million. Shares of Infineon Technologies climbed 2.5%.
The German chipmaker swung to a fiscal third quarter net profit of EUR126 million from a loss of EUR24 million in the same period a year ago. It also raised its full year forecasts. In French corporate news, Safran shares shot up 6.5%.
The aerospace firm lifted its fiscal year outlook after reporting an 8% rise in first half adjusted net income. In the airline sector, shares of Air France-KLM gained 1.1%.
The firm saw an acceleration of activity levels during its fiscal first quarter and swung to a net profit of EUR768 million in the quarter. Shares of German rival Deutsche Lufthansa climbed 2.2% and those of SAS moved up 3.5% in Sweden.
However, easyJet shares tumbled 7.1% after the low-cost airline said that, atconstant currency, its third quarter operating costs per seat excluding fuel rose 1.8%. The figure also doesn't include 36 million pounds of additional cost resulting from disruption caused by the volcanic ash cloud.
Asian markets
Asian markets ended mostly higher Wednesday, with Japanese stocks charging ahead as solid corporate earnings from Canon put some extra gloss on the already better outlook for exporters.
Chinese stocks also jumped after the central bank said there was little risk of a double dip recession while Sydney shares were paced on hopes the Reserve Bank of Australia won't increase rates after consumer prices rose less than expected.
China's Shanghai Composite climbed 2.3% to finish at a two month high, Australia's S&P/ASX 200 added 0.7%, South Korea's Kospi advanced 0.3%, Taiwan's Taiex rose 0.5% and Hong Kong's Hang Seng Index gained 0.6%. India's Sensex defied the broad trend to decline 0.7% in afternoon trade.
Japan's Nikkei Stock Average was the best performer of the region, surging 2.7% as Canon soared 5.7% on the back of its quarterly results Tuesday. Dow Jones Industrial Average futures climbed 16 points in screen trade.
Other Japanese electronics makers also jumped after Canon reported Tuesday that its April to June net profit surged four fold from the year earlier due to brisk sales of digital cameras and printers. Sony Corp. rose 2.7% and Nikon Corp. gained 3.2%.
Yahoo Japan fell 3.0% despite a 13% growth in net profit for the first quarter ended June 30, after the stock rose 6.0% in the past three sessions.
Yahoo Japan also confirmed plans to team up with Google to use the U.S. giant's search engine technology. Yahoo Inc. said its own plans to roll out a global search alliance with Microsoft Corp. wouldn't be affected by affiliate Yahoo Japan's decision to tie up with Google.
Banks across the region advanced after their European and U.S. peers rose on better than expected second quarter earnings from UBS and Deutsche Bank.
The sector also continued to get a fillip from news Tuesday the latest update of the Basel III rules on their capital requirements won't be as tough as anticipated.
In Tokyo, Mizuho Financial added 2.9% and Mitsubishi UFJ Financial jumped 3.6%. Shinhan Financial Group gained 1.3% in Seoul, National Australia Bank rose 1.5% in Sydney and HSBC Holdings climbed 2.6% in Hong Kong.
The market was weighed as shares of heavyweight Reliance Industries dropped 3.0%, although the energy and petrochemicals major reported a 32% growth in quarterly net profit late Tuesday. The drop came on worries about a slow ramp up of natural gas production from a field on India's east coast.
Chinese shares reversed early losses after the People's Bank of China said Tuesday there's little risk of a double dip recession.
Banks stocks rose after the China Banking Regulatory Commission said, in a statement, loans identified as being high risk won't necessarily become nonperforming loans.
This followed recent media reports that about 20% of the loans made to local governments' financing vehicles were at high risk of default. ICBC rose 1.9% and China Construction Bank gained 1.4%.
Commodities and base metals
Base metals on the London Metal Exchange closed higher Wednesday, as positive comments from China regarding its economic growth outlook continued to provide upward pressure despite disappointing U.S. data.
The mood was more bullish Wednesday, after the People's Bank of China made a statement saying there is little risk of a double dip recession and that the current slowdown in the country's economy is beneficial for long term sustainable growth.
Crude futures fell slightly Wednesday, as mixed economic data and a report on U.S. oil inventories kept traders wary about demand in a sluggish recovery.
Light, sweet crude for September delivery settled 51 cents, or 0.8%, lower at $76.99 a barrel on the New York Mercantile Exchange, hanging tightly to the middle of a trading range that has contained futures for several weeks.
Brent crude on the ICE futures exchange settled at 7 cents lower at $76.06 a barrel. Gold futures edged higher Wednesday, rising above three month lows on bargain buying but showing little direction as demand for refuge assets remains low.
The most actively traded contract, for December delivery, settled up 60 cents, at $1,162.40 an ounce on the Comex division of the New York Mercantile Exchange.
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