World Market Overview Report 02/03/2011
U.S. stocks
U.S. stocks fell hard Tuesday as oil approached $100 a barrel and Federal Reserve Chairman Ben Bernanke said rising energy prices could dent the recovery. The Dow Jones Industrial Average fell 147.04 points, or 1.2%, to 12,078.30, with 24 of its 30 components in the red. The blue chips rose 2.8% in February, their best February performance in 13 years.
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After finishing February with a 3.2% gain, the S&P 500 Index Tuesday declined 18.81 points to 1,308.41, with industrials fronting declines that stretched to include all of its 10 major industry groups. Leading the declines among the S&P's financials, shares of Fifth Third Bancorp were off 4.3% after the bank-holding company said in a filing that U.S. regulators were probing its accounting and reporting of commercial loans. The Nasdaq Composite Index fell 47.11 points, or 1.6%, to 2,735.16.
European markets
European markets ended lower Tuesday amid losses for financial stocks and some oil companies, while Italy's Luxottica Group SpA rose after reporting strong earnings. The Stoxx Europe 600 index fell 0.6% to settle at 284.63, as unrest in the Middle East continued to act as a brake on broadly solid economic expectations. Europe's move came as stocks in Saudi Arabia ended the session sharply lower and oil prices pushed higher. The Tadawul All Share Index closed down 6.8%, extending its losses for the year to date to more than 16%. Investors worried that the unrest in the Middle East and North Africa will continue to spread.
Among oil stocks, Total SA dropped 2.1% in Paris and Eni SpA slipped 1.1% in Milan as worries about production continued to weigh on the sector. The U.K.'s FTSE 100 index fell 1% to close at 5,935.76 as shares of HSBC Holdings PLC sank nearly 3%. HSBC was downgraded to neutral from buy at UBS following Monday's disappointing results from the bank. It was also cut to hold from buy at Deutsche Bank. Most European lenders were lower, including a 1.7% drop for Spain's Banco Santander which helped pull the Spanish IBEX 35 index down 0.8% to 10,761.90. Italy's Luxottica rallied 3.3% after it said late Monday that fourth-quarter profit nearly doubled, as it also hiked its dividend payout. The French CAC 40 index finished 1.1% lower at 4,067.15, led by a 3.5% drop for Societe Generale as bank stocks weakened. The German DAX 30 index lost 0.7% to end at 7,223.30, as Deutsche Bank AG dropped 1.6%. Shares in BMW AG rose 1.5% after data showed German new car registrations jumped 15% in February.
Asian Markets
Indian stocks soared to extend gains Tuesday, with auto companies leading after Monday's federal budget didn't raise excise duties and as February sales increased.
Most other regional markets also advanced, with stocks in Shanghai and Hong Kong rising after two separate surveys showed China's manufacturing activity continued to expand in February, albeit at a smaller pace. Japan's Nikkei Stock Average advanced 1.2%, Taiwan's Taiex finished 1.5% higher and India's Sensex climbed 3.5%.
China's Shanghai Composite Index rose 0.5% and Hong Kong's Hang Seng Index gained 0.3% after Chinese manufacturing PMI data were announced. China's official manufacturing PMI slowed to 52.2 in February from 52.9 in January, while the HSBC PMI for February fell to 51.7 from 54.5 in January. Aluminum Corp. of China rose 2.1% in Shanghai but dropped 4% in Hong Kong. The company swung to a profit in 2010, though the figure fell short of expectations. In Hong Kong, heavyweight HSBC Holdings slumped 5.1% a day after it reported that 2010 net profit more than doubled to $13.2 billion, but also fell short of expectations. In Mumbai, shares of Tata Motors rose 5.5% and Maruti Suzuki climbed 6.8%, after Finance Minister Pranab Mukherjee Monday didn't raise excise duties on vehicles. Many investors had feared that the taxes would rise.
Base metals
Base metals closed mostly lower on the London Metal Exchange Tuesday after a jump in crude futures rekindled investor fears that the recent spike in oil prices may pose a threat to global growth. Interest in the dollar-denominated commodities was also damped by the greenback, which came off its earlier lows supported by strong U.S. manufacturing data and a constructive outlook on the economy from Federal Reserve Chairman Ben Bernanke. LME three-month copper fell from its intraday high of $9,942 a metric ton, dropping sharply as stops were triggered, to close at $9,859/ton down $21 on Monday's PM kerb close.
Oil futures climbed Tuesday as violence in Libya and the potential spread of the turmoil in the Middle East region continued to feed concerns over global oil supplies, sending prices above $99 a barrel. Light, sweet crude oil for April delivery settled $2.66 higher at $99.63 a barrel on the New York Mercantile Exchange. Brent crude oil on the ICE futures exchange rose 3.3% to close above $115 a barrel. Gold settled at an all-time high, and silver neared a 31-year peak as Middle East unrest spread and inflation worries mounted. The most-actively traded gold contract, for April delivery, rose $21.30, or 1.5%, to a record settlement of $1,431.20 a troy ounce on the Comex division of the New York Mercantile Exchange.
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