World Market Overview
U.S. blue chip stocks fell slightly Wednesday, one day after a major market rout, although retailers were doing well, offsetting sinking financials. The Dow Jones Industrial Average fell five points to trade at 11018 recently, while the Standard & Poor's 500-stock index rose three points to 1181 and the Nasdaq Composite gained 15 points to 2485.
Consumer discretionary stocks were strong after a second consecutive day of encouraging results from big-box retailers. Target gained 4% after third quarter earnings rose 23%, beating analysts' forecasts. BJ's Wholesale Club added 2.8% after reporting a 32% earnings jump and raising its full-year earnings forecast. The pair of strong profit reports came a day after Wal-Mart Stores and Home Depot posted positive earnings reports, though those two stocks were among the weakest of the Dow components, falling 1.1% and 2.9%, respectively, after climbing Tuesday.
Other retailers were among the best-performing stocks, with Coach adding 3.4%, Office Depot gaining 3.2% and Kohl's rising 4.1%. Weighing on the downside were financial stocks, which fell after The Wall Street Journal reported that the Federal Deposit Insurance Corp. is conducting about 50 criminal investigations of former executives, directors and employees at U.S. banks that have failed since the start of the financial crisis. The Journal reported separately that the Federal Reserve will require all 19 banks that underwent stress tests during the height of the financial crisis to undergo another review of their capital and their ability to absorb losses under an adverse economic scenario.
Bank of America and J.P. Morgan Chase fell 1.7% and 0.8%, respectively, while Regions Financial dropped 5.7%, Keycorp sank 3.4% and Wells Fargo declined 1.1%. U.S. consumer prices showed a modest rise of 0.2% in October on the back of higher gasoline prices, and underlying inflation remained flat for the third straight month. Meanwhile, U.S. home construction during October fell to its lowest level in 18 months, a fresh reminder that the moribund industry's recovery is sluggish. U.S. housing starts fell 11.7% to a seasonally adjusted annual rate of 519,000, while building permits increased 0.5% to 550,000.
European markets
European shares climbed Wednesday, recovering some ground after the previous session's heavy losses as officials from the Europe Union and the International Monetary Fund announced talks with Ireland aimed at determining the best way to provide potential aid. The Stoxx Europe 600 index gained 0.5% to end at 267.31. The French CAC 40 index rose 0.8% to 3,792.35, as shares of banking group Societe Generale gained 2%.
The German DAX 30 index ended up 0.6% at 6,700.07. The U.K.'s FTSE 100 index edged up 0.2% to 5,692.56, led higher by shares of Experian, which surged more than 6%. The information-services firm posted a rise in fiscal first half profit and lifted its dividend by 29%. Benchmark indexes in Europe's peripheral nations also posted gains.
Ireland's ISEQ index rose 1.5%, with shares of Bank of Ireland gaining more than 2% in Dublin. Officials from the European Central Bank, IMF and European Commission are due to conduct a consultation with Ireland about the best way to provide any necessary support to address market risks, especially regarding the troubled Irish banking sector.
Pharmaceutical companies were among the best performers after the announcement of a cost cutting plan from Roche Holding and a positive drug recommendation for GlaxoSmithKline. Shares of GlaxoSmithKline gained 2.4% in London, while shares of Roche rose 1.3%.
Asian markets
Asian stock markets ended mostly lower Wednesday, with Chinese stocks extending their recent heavy losses on worries Beijing may unveil more tightening measures to restrain prices. Japan's Nikkei Stock Average ended 0.1% higher, South Korea's Kospi slipped 0.1% and Taiwan's Taiex gave up 0.7%. Hong Kong's Hang Seng Index declined 2.0%, while China's Shanghai Composite dropped 1.9%.
Commodity linked shares were hit across the region as European sovereign debt troubles reined in risk appetite and pushed the U.S. dollar higher against major global currencies. Mitsubishi Materials lost 4.0% in Tokyo and Korea Zinc lost 2.9% in Seoul. In Shanghai, Jiangxi Copper dropped 2.9%, PetroChina and Zijin Mining Group each lost 1.9%, and Datong Coal Industry lost 3.0%. In Hong Kong, Jiangxi tumbled 8.2% and PetroChina skidded 3.3%.
Base metals
Base metals closed mostly higher on the London Metal Exchange Wednesday after drifting up during the session as the euro rebounded against the U.S. dollar. Copper closed the session 0.5% higher on the day, while aluminum was up 1.5% and nickel finished 3.5% higher.
The metals were boosted as the greenback retreated on new figures which showed the October U.S. consumer price index rose just 0.2%, lower than expectations of a 0.3% gain, and monthly housing starts fell to their lowest level in more than 18 months. Copper remains $776, or 8.7%, off last week's record high, but analysts continue to be confident of a resumption in the metals' uptrends, supported in particular by supply concerns for the flagship copper market which often pulls the other metals up with it as it rallies.
BNP Paribas Wednesday upped its 2011 forecasts across the base metals, raising its copper forecast 2.3% to $8,900/ton from $8,700/ton, aluminum 6.6% to $2,425/ton from $2,275/ton and tin 15.5% to $28,000/ton from $24,250/ton. Crude futures fell Wednesday as a surprise drop in U.S. oil and gasoline inventories couldn't dispel worries about global demand.
Fears about China's efforts to cool its economy and renewed sovereign debt problems in Europe helped push oil prices to settle $1.90 lower at $80.44 a barrel. Comex gold futures settled in the red as flat U.S. inflation data and a deteriorating debt situation in Ireland pushed investors to the sidelines.The most actively traded contract, for December delivery, settled down $1.50, or 0.1%, at $1,336.90 per troy ounce on the Comex division of the New York Mercantile Exchange.
Newsletter: Subscribe to receive this report daily