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Stocks Adding To Yesterday's Steep Losses In Early Trading
Stocks have
moved mostly lower in early trading on Wednesday, extending the sharp
downward move seen over the course of the previous session. The major
averages have dipped into negative territory, although the Dow is
posting only a modest loss.
Currently, the major averages are all in the red, but the Dow is down only 3.84 points or less than a tenth of a percent at 13,453.71. The Nasdaq is down 13.08 points or 0.4 percent at 3,104.65 and the S&P 500 is down 4.09 points or 0.3 percent at 1,437.50.
The
early weakness on Wall Street reflects lingering concerns about the
financial situation in Europe, with the yield on Spain's ten-year bond
climbing above 6 percent.
It now seems increasingly likely that
Spain will seek a bailout despite widespread public protests against
austerity measures for the 2013 budget set to be unveiled on Thursday.
Adding to the concerns about Europe's debt crisis, German newspaper Bild reported
that Bundesbank is preparing a lawsuit against the European Central
Bank claiming that the central bank is overstepping its mandate in
launching the latest round of bond purchases.
While the focus is
largely on Europe, trading could be impacted by the release of the
Commerce Department's monthly report on new home sales in the U.S., with
economists expecting sales to climb to an annual rate of 380,000 in
August from 372,000 in July.
However, the impact of the report
may be limited due to its backward-looking nature, with many traders
looking ahead to future data to determine the effectiveness of the
Federal Reserve's recent announcement of another round of quantitative
easing.
Philadelphia Fed President Charles Plosser warned Tuesday that the additional stimulus is not likely to do much to benefit growth or employment.
Gold stocks
have shown a notable move to the downside in early trading, dragging
the NYSE Arca Gold Bugs Index down by 1.9 percent. The weakness among
gold stocks come as the price of the precious metal is falling by more
than $20 an ounce.
Significant weakness has also emerged among steel stocks,
which are extending a recent downward move amid concerns about global
demand. Computer hardware, oil service, and networking stocks have also
come under pressure, while strength is visible among utilities stocks.
In overseas trading, stock markets across the Asia-Pacific region saw notable weakness during trading on Wednesday. Japan's Nikkei 225 Index plummeted by 2 percent, while Hong Kong's Hang Seng Index ended the day down by 0.8 percent.
The major European markets have also shown substantial moves to the downside on the day. While the U.K.'s FTSE 100 Index has tumbled by 1.4 percent, the German DAX Index and the French CAC 40 Index have plunged by 1.8 percent and 2.2 percent, respectively.
In the bond market, treasuries have
shown a strong upward move, extending a recent winning streak. As a
result, the yield on the benchmark ten-year note, which moves opposite
of its price, is down 4.8 basis points at 1.634 percent.
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TSX Dips At Open Wednesday
Toronto stocks
moved lower at open Wednesday amid selling across a variety of sectors,
with the S&P/TSX Composite Index losing 66.85 points or 0.55
percent to 12,190.33.
Among gold stocks, Royal Gold, Barrick Gold, Agnico-Eagle Mines and Goldcorp. were down nearly 2 percent each.
The Diversified Materials Index lost over 1 percent, with Inmet Mining, First Quantum Minerals and Teck Resources shedding around 1 percent each.
In the oil patch, Vermilion Energy, Pacific Rubiales Energy and Baytex Energy Corp. lost around 2 percent each.
Bombardier Inc.
slipped over 1 percent even after it said it secured $158 million worth
of orders from Israel Railways for additional 72 double-deck coaches.
Onex Corp.
slipped 0.50 percent after announcing that it would acquire
KraussMaffei AG, a manufacturer of plastic and rubber processing
equipment, for 568 million euros.
Meanwhile, Research In Motion gained over 4 percent.
The
price of crude oil was extending losses for a third session Wednesday
morning as traders await cues from the official inventories data due out
later today. The EIA will come out with its U.S. crude oil inventories
report for the weekended September 21. Analysts expect crude oil
inventories to jump by 1.5 million barrels and gasoline stocks are seen
unchanged. Crude for November shed $1.28 to $90.09 a barrel.
The price of gold was
moving lower Wednesday morning as the U.S. dollar was extending gains
versus a basket of currencies. Gold for December lost $17.40 to
$1,749.00 an ounce.
In corporate news from Canada, Onex Corporation said it would acquire KraussMaffei AG, a manufacturer of plastic and rubber processing equipment, for 568 million euros.
Bombardier Transportation of Bombardier Inc. said it secured $158 million worth of orders from Israel Railways for additional 72 double-deck coaches.
Diversified services provider IBI Group Inc.
announced the adoption of a dividend reinvestment plan, which allows
eligible shareholders to direct that their cash dividends be reinvested
in additional common shares of the company.
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European Markets Firmly In The Red As Debt Worries Intensify
The European markets
are firmly in the red in afternoon trading Wednesday, as worries about
the effectiveness of stimulus measures killed risk appetite, amid
clashes in Spain over austerity measures. Banks and miners are under
pressure.
Spain's capital Madrid witnessed clashes between riot
police and thousands of demonstrators outside Parliament. The protesters
were attempting to form a human chain around parliament as a sign of
protest against the government's handling of the financial crisis.
The
development comes amidst preparations by the Spanish government headed
by Mariano Rajoy to announce the 2013 budget on Thursday. It is said to
include more painful austerity measures aimed at reducing the country's
widening budget deficit by more than 60 billion euros by 2014.
The
benchmark Spanish 10-year bond yields moved closer to the 6 percent
level after Catalan regional government called for a referendum to
decide whether it should be vested with more autonomy.
Philadelphia Federal Reserve President Charles Plosser
said Tuesday that the Fed's third round of quantitative easing is not
likely to do much to benefit growth or employment. He said the move
risks the central bank's credibility.
Meanwhile, a report in German newspaper Bild said the Bundesbank was
preparing a lawsuit against the European Central Bank, claiming that
the central bank is overstepping its mandate in launching the latest
round of bond buying program, known as the Outright Monetary
Transactions.
In economic news, French consumer confidence
dropped slightly in September to 85 from 86 in August, weighed down by
households' weak assessment about future economic situation as well as
labor market conditions, Insee said. The index was forecast to remain
steady at 86.
Germany's Federal Statistical Office is
scheduled to release flash inflation data at 8.00 am ET. EU harmonized
inflation is expected to slow marginally to 2.1 percent in September
from 2.2 percent in August.
The Euro Stoxx 50 index of eurozone bluechip stocks is declining 1.93 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is falling 1.09 percent.
The German DAX is declining 1.56 percent and the French CAC 40 is dropping 2.01 percent. The UK's FTSE 100 is losing 1.15 percent and Switzerland's SMI is falling 0.90 percent.
In Frankfurt, Deutsche Bank is declining 3.2 percent and Commerzbank is falling 3 percent. Infineon Technologies is losing 3.1 percent. Jefferies cut the stock to "Underperform" from "Hold." Continental is losing 2.8 percent. Schaeffler Verwaltungs GmbH sold 20.8 million shares of the company on Tuesday.
Morgan Stanley removed Lufthansa from "Best Ideas List.'' The stock is losing 1.1 percent. Volkswagen, BMW and Daimler are declining between 2 percent and 1.5 percent.
In Paris, Credit Agricole, Societe Generale and BNP Paribas are declining between 4.5 percent and 3.2 percent. Grocery retailer Carrefour is declining 4 percent, carmaker Renault is losing 3.7 percent and telecom equipment firm Alcatel Lucent is dropping 3.5 percent.
STMicroelectronics is declining 3.2 percent. S&P Equity cut its rating on the stock.
In London, Among miners, Kazakhmys, Vedanta and Anglo American are losing between 3.1 percent and 3 percent. Russian steelmaker Evraz is falling 3.7 percent. Royal Bank of Scotland is declining 3 percent and Barclays is losing 2.9 percent. Standard Chartered is down 2.6 percent.
ICAP
is declining 4.2 percent as the inter-dealer broker expects revenues
for the first half to be about 14 percent lower than the previous year.
London Stock Exchange is falling 1.4 percent after stating that trading remained subdued in the 5-month period ended August 31.
Myriad Group is plunging 17.6 percent in Zurich. The software developer launched a rights issue of 10.0 million Swiss francs and reported a wider loss for the first half of the year.
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Asian Stocks Extend Declines On Mounting Growth Worries
Asian stock markets
fell across the board on Wednesday, as continued tensions between China
and Japan, lingering uncertainty over when Spain will seek a bailout
and apprehensions about the effectiveness of recent central-bank actions
cast a shadow on global growth prospects.
International ratings agency Standard & Poor's Corp.
on Tuesday lowered its 2012 and 2013 growth expectations for the euro
zone, reflecting concerns that the region is entering a new period of
recession. The International Monetary Fund is set to lower its growth
estimates for the global economy next month when it updates its
projections.
Concerns over Europe's economic situation also
weighed on risk appetite as thousands of protesters marched on Madrid's
parliament building expressing angst against a new round of harsh
austerity measures the government prepares to unveil in its draft budget
plan for 2013 on Thursday. Spain, meanwhile, is set to disclose the
results of a stress test of 14 Spanish banking groups by Oliver Wyman on
Friday, which along with the new structural reforms expected to be
unveiled will determine whether the country will ask for a full bailout.
German finance minister Wolfgang Schaueble called on Spain to make a decision on whether it needed a bailout, saying the country needs to regain confidence of the markets.
In
Greece, trade unions have called a nationwide general strike today to
protest against planned new spending cuts worth nearly 12 billion euros
over the next two years that Greece has promised international creditors
in an effort to secure its next tranche of aid.
Japanese shares
fell to a two-week low, as many stocks went ex-dividend and the yen's
continued strength on global growth concerns weighed on export-reliant
companies. The Nikkei average fell over 2 percent to end below
the 9,000 mark for the first time since Sept. 13, with aviation stocks,
electronics makers and transport equipment companies suffering the
biggest losses.
The broader Topix index also lost 2
percent, weighed down by domestic political uncertainty after the main
opposition party chose former prime minister and security hawk Shinzo
Abe as its new leader, strengthening calls for a hard line against
China. The ruling party is expected to suffer a serious setback in
general elections expected this year due to the upcoming tax hikes.
Toyota and Nissan fell
about 3 percent each amid reports that they are scaling back production
in China after the foreign ministers of China and Japan held stern
talks on a bitter territorial dispute but made no breakthrough.
China-related Komatsu and Hitachi Construction Machinery also fell over a
percent each.
Sony tumbled 4.5 percent after Standard
& Poor's Ratings Services downgraded its long-term credit ratings on
the company by one notch, citing a slow recovery in the company's
mainstay consumer electronics business. Exporter Canon plunged 4.5
percent, Honda Motor slumped 4.2 percent and Panasonic dropped 2.5
percent.
China's Shanghai Composite index fell 1.2 percent
to its lowest level since early 2009 as caution crept in ahead of the
upcoming extended "Golden Week" holiday staring September 30. Hong
Kong's Hang Seng index ended down 0.8 percent, dragged down by
retailers after fashion retailer Esprit Holdings reported
weaker-than-expected annual results.
Australian shares fell modestly on worries about Spain's fiscal strains ahead of Thursday's budget. The benchmark S&P/ASX 200 and the broader All Ordinaries index fell about 0.3 percent each, with gains in defensive stocks limiting further downside. Mining stocks extended their recent losses on pessimism about global growth prospects in light of the continuing downturn in China. BHP Billiton fell 1.3 percent, Rio Tinto lost 2 percent and gold miner Newcrest edged down 0.3 percent.
Banks also drifted lower, a day after the Reserve Bank of Australia said the domestic financial system was well placed to cope with any shocks from abroad. Westpac edged down marginally, ANZ slipped 0.2 percent and NAB retreated 0.6 percent, while Commonwealth added 0.1 percent. Nexus Energy
ended on a flat note after Seven West Media chief executive and former
Woodside boss Don Voelte joined its board as non-executive chairman.
Seoul
shares hit a two-week low on growth worries following hawkish comments
from Federal Reserve Bank of Philadelphia President Charles Plosser. The
benchmark Kospi average fell 0.6 percent, dragged down by
builders amid reports which indicated that Kukdong Engineering &
Construction may go bankrupt due to ongoing problems with liquidity.
New Zealand shares fell from a 4 1/2-year high, in line with broad-based losses across Asia. The benchmark NZX-50
index slid 16 points 0.4 percent to 3,809, with Fletcher Building and
SkyCity Entertainment Group pacing the decliners on going ex-dividend.
Shares of the nation's largest construction company fell 3 percent,
while those of SkyCity tumbled 3.6 percent. Among other prominent decliners, stock exchange operator NZX, carpet maker Cavalier and resins maker Nuplex lost 2-4 percent.
Children's
clothing retailer Pumpkin Patch ended unchanged ahead of its annual
results tomorrow, heavyweight Telecom edged up 0.2 percent and online
auction site Trade Me rose half a percent. New Zealand Oil & Gas gained 0. 6 percent after the company confirmed it would drill the Taranaki oil and gas prospect, Kakapo.
Elsewhere, India's benchmark Sensex was down 0.4 percent, Indonesia's Jakarta Composite index fell 1.1 percent, Singapore's Straits Times was losing 0.7 percent and the Taiwan Weighted average retreated 0.8 percent, while Malaysia's KLSE Composite was up marginally.
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Crude Slips Near $90
The price of crude oil
was extending losses for a third session Wednesday morning as traders
await cues from the official inventories data due out later today.
Light Sweet Crude Oil
(WTI) futures for November delivery shed $0.68 to $90.69 a barrel.
Yesterday, oil extended losses to settle near a 2-month low as the
dollar rebounded to trade higher after comments from Philadelphia
Federal Reserve President Charles Plosser dampened investor sentiments.
Plosser indicated the Fed may have to raise short-term interest rates
before mid-2015 and believes the current round of quantitative easing
would not do much for the economy.
Tuesday after the market
hours, the API said U.S. crude oil inventories rose 335,000 barrels and
gasoline stocks added 112,000 barrels in the weekended September 21.
This morning, the U.S. dollar was steady near a 2-week high versus the euro and trading higher against sterling. The buck was moving higher versus the Swiss franc, while continued to tick lower against the yen.
In
economic news, euro zone leading index recorded its first increase in
six months, rising 0.6 percent month-on-month in August to 105.3, the
Conference Board said.
Traders will look to the new home
sales report for August from the Commerce Department, due out at 10 a.m.
ET. The consensus estimate calls for new homes sales of 380,000
compared to 372,000 in July.
Today during trading hours, the EIA will
come out with its U.S. crude oil inventories report for the weekended
September 21. Analysts expect crude oil inventories to jump by 1.5
million barrels and gasoline stocks are seen unchanged.
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