The Star Online: Business
The Star Online: Business |
- US, European, Asian stocks plunge on European debt worries
- Oil settles below US$98
- Copper falls on news of slower China manufacturing
| US, European, Asian stocks plunge on European debt worries Posted: 23 May 2011 06:16 PM PDT NEW YORK: After three days of bad news about Europe's debt crisis sent Asian and European markets down Monday, it was Wall Street's turn. The Dow Jones industrial average fell as many as 180 points before paring back some of its losses. Another steep downgrade of Greece's credit rating, a warning on Italy's debt and a major defeat of Spain's ruling party caused new worries about Europe's debt crisis. That sent the euro lower against the dollar. A stronger dollar makes it more expensive for other countries to buy U.S. exports, hurting U.S. companies that sell goods abroad. Fears that Europe's debt troubles could escalate, as they did last year when Greece melted down, sent stocks tumbling across the globe. The dollar rose 0.6 percent against an index of global currencies Monday. The euro dipped briefly to its lowest level against the dollar in two months. The bad news began late Friday, when the Fitch ratings agency downgraded Greece's debt further into junk status. That gave investors more reason to fear that the country will need more help managing its debts beyond the emergency loan package it received last year. Then Standard & Poor's said Saturday that Italy was in danger of having its debt rating lowered if it could not reduce its borrowing and improve economic growth. The next day, Spain's ruling Socialist party was roundly defeated in local elections, potentially jeopardizing the country's deficit-cutting program. The Dow fell 130.78 points, or 1.1 percent, to close at 12,381.26. The Standard & Poor's 500 index fell 15.9, or 1.2 percent, to 1,317.37 All but a handful of stocks in the S&P 500 fell. The Nasdaq composite index fell 44.42, or 1.6 percent, to 2,758.9. Four stocks fell for each one that rose on the New York Stock Exchange. Volume was 3.4 billion shares. European markets also closed sharply lower. The FTSE 100 index of leading British shares fell 1.9 percent. Germany's DAX lost 2 percent. The CAC-40 in France was 2 percent lower. While stocks are reacting strongly to the weekend's headlines, investors are not selling corporate bonds. If they were, it would signal that investors were growing wary of risk, said Jack Ablin, chief investment officer at Harris Private Bank. "There's a short-term perception of risk, but I'm not viewing it as necessarily lasting," said Ablin. Still, as investors sought safer assets, the yield on the 10-year Treasury note went as low as 3.10 percent, its lowest level of the year. The yield moved back up to 3.13 percent in afternoon trading, slightly below the 3.15 percent it traded at late Friday. Bond yields fall when their prices rise. Some analysts think a downturn in stocks was overdue. Markets have wobbled over the past few weeks, but the Dow is still up 7 percent this year. The index has shrugged off revolutions in the Arab world, attempts by China and other emerging markets to slow growth and the nuclear crisis in Japan. Now that the U.S. corporate earnings season is over, global news has become the focus. "There's not a lot of good news," said Randy Bateman, president of Huntington Asset Advisors. "Investors needed an excuse to pull back." Downgrades of sovereign debt can shock world markets when they're first announced. Recently, debt downgrades have had a short-term effect. Moody's downgraded Spain's debt on March 10. The Ibex 35 sank 1.3 percent on the news, but recovered its losses within days. S&P downgraded its debt outlook for the U.S. on April 17 from stable to negative, meaning it could lower the country's debt rating in the future. The warning sent the Dow down 240 points in morning trading, but it recovered the next day. The retreat was evident in Asia earlier, where Japan's Nikkei 225 slid 1.5 percent to close at 9,460.63. South Korea's Kospi tumbled 2.6 percent to 2,055.71. Hong Kong's Hang Seng shed 2.1 percent to 22,711.02. Mainland Chinese shares dropped almost 3 percent Monday, the most in more than four months, as news that an international stock trading board may be launched in Shanghai soon added to worries over a possible shortage of funds. A relatively weak Chinese manufacturing survey also raised fears about economic growth in the world's second-largest economy. The benchmark Shanghai Composite Index sank 2.9 percent to 2,774.57, while the Shenzhen Composite Index of China's smaller, second exchange lost 3.6 percent to 1,149.39. Shares in chemicals, textiles and paper processing companies weakened. - AP Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
| Posted: 23 May 2011 06:12 PM PDT NEW YORK: Oil dropped more than 2 percent Monday as the dollar strengthened and an energy research group said it expected the growth in Chinese demand for oil to slow later this year. Benchmark crude for July delivery lost $2.40, or 2.4 percent, to settle at $97.70 per barrel on the New York Mercantile Exchange. In London, Brent crude gave up $2.29 or 2 percent, to settle at $110.10 per barrel on the ICE Futures exchange. Crude dropped as the dollar rose against other currencies. Oil is priced in dollars, and it tends to fall as the dollar rises and makes crude more expensive for investors holding foreign money. The U.S. Dollar Index, which measures the dollar against other major currencies, rose 0.7 percent amid concerns about Europe's debt crisis. Last week credit ratings agency Fitch downgraded Greece again and Standard & Poor's lowered Italy's ratings outlook. The euro tanked on a combination of credit rating downgrades, a big election defeat for Spain's governing party and disagreements among top European officials on how to deal with the financial crisis. Meanwhile Platts, the energy information arm of McGraw-Hill Cos., reported Monday that the rapid rise in China's oil consumption slowed in April. China consumed 9.37 million barrels per day in April, up 8.3 percent from the same period last year, but down from the 10 percent average growth in the first quarter of this year. A decelerating economy and high oil prices were "denting end-user demand" in China, Platts said. China is the second biggest petroleum consumer in the world behind the U.S. Other government and industry data show that gasoline demand in the U.S. has declined for two months as pump prices rose above $4 per gallon in many states. The Platts report suggests that international gasoline demand also has been hurt by higher prices. "You have to ask how unrealistic it's been that prices have been pushed up to this level," analyst and trader Stephen Schork said. "There could be further weakness in this market." In other Nymex trading, heating oil lost 7.12 cents to settle at $2.8471 per gallon and gasoline futures added 0.23 cent to settle at $2.9381 per gallon. Natural gas gained 10.3 cents to settle at $4.393 per 1,000 cubic feet. - AP Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
| Copper falls on news of slower China manufacturing Posted: 23 May 2011 06:05 PM PDT NEW YORK: Copper prices fell Monday after a survey showed China's manufacturing sector slowed in May, an indication that the pace of growth may be easing in the world's-second largest economy. Copper also was pressured by a decline in Chinese imports and a stronger dollar. It headed a parade of falling prices for most commodities as fears continued to grow about Europe's effort to resolve its debt problems. China is a huge importer of commodities, from copper to oil. Investors are concerned the government's efforts to control inflation could hurt demand. The preliminary HSBC Flash China Purchasing Managers' Index for May fell to 51.1 from 51.8 in April, marking the slowest pace of growth in 10 months, Barclays Capital analysts said in a client report. In addition, China's refined copper imports in April fell by 48 percent and concentrate imports fell by 23 percent from the previous year, the analysts said. Scrap imports increased 2 percent from a year ago. Meanwhile, Italy was drawn into Europe's widespread debt problems after Standard & Poor's lowered its outlook Saturday for the country's debt to negative from stable. That means there is a one-in-three chance that S&P would downgrade Italy's debt rating in the next two years. Some investors are concerned that Italy could join Greece, Portugal and Ireland on the list of European countries with serious debt problems. "The bottom line here is we are starting to see concerns or fears of a slowdown in China and obviously in Europe," said Dave Meger, vice president of metals trading at Vision Financial Markets. In metals contracts for July delivery, copper fell 13 cents to settle at $3.9915 a pound, silver dropped 18.3 cents to $34.904 an ounce and platinum lost $13.50 to $1,755.90 an ounce. June palladium settled down $3.70 at $731.80 an ounce. Gold was one of the few commodities to gain as investors sought safety. Gold for June delivery rose $6.50 to settle at $1,515.40 an ounce. Most commodities were hurt by a stronger dollar. Commodities are priced in dollars so a stronger dollar means they become more expensive for buyers using other currencies. In other trading, oil prices settled down 2.4 percent on ongoing concerns about Chinese demand. Platts, the energy information arm of McGraw-Hill Cos., said Monday China consumed 9.37 million barrels per day in April compared with 8.3 percent from the same period last year. The total was down from the 10 percent average growth in the first quarter of this year. Benchmark crude for July delivery fell $2.40 to settle at $97.70 a barrel on the New York Mercantile Exchange. In other Nymex contracts for June, heating oil dropped 7.12 cents to settle at $2.8471 per gallon, gasoline rose 0.23 cent to $2.9381 a gallon and natural gas gained 10.3 cents to $4.393 per 1,000 cubic feet. Grains and beans fell. In contracts for July delivery, wheat fell 3.5 cents to settle at $8.03 a bushel, corn dropped 5.5 cents to $7.54 a bushel and soybeans fell 6.5 cents to $13.7375 a bushel. - AP Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
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