Fear Grips World Markets; Weak Commodities

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
29 Jun, 2010
New York City

World markets declined sharply after economic outlook on China was revised and U.S. consumer confidence faltered. Resource stocks plunged the most in a year. European markets dropped more than 3% as liquidity concerns at banks resurfaced and Greece faced another protest.

[R]9:00 PM New York – World markets declined sharply after economic outlook on China was revised and U.S. consumer confidence faltered. Resource stocks plunged the most in a year. European markets dropped more than 3% as liquidity concerns at banks resurfaced and Greece faced another protest.[/R]

U.S. stocks trade lower after markets in China fell sharply an Asian markets traded lower. The latest read on U.S. consumer confidence also showed a decline as job prospects and access to consumer loans remain difficult. Resource stocks led the decliners in the worldwide sell-off that originated in Shanghai trading.

European stocks edge lower after jitters about liquidity issues ahead of bank repayments to the European Central Bank later this week. IMF approves €383.2 million to Serbia. European Commission extends bank support schemes in Ireland, Spain, Denmark, and Hungary.

The UK markets slumped after the Conference Board drastically revised down its April gauge for China''s economic outlook. UK mortgage approvals decline slightly but money supply remained static in May. Scott Wilson agrees to better offer from CH2M HILL. Emerson Electric rebids to acquire Chloride Group.

Stocks in Japan traded down after unemployment rate increased and household spending declined in May. Auto makers in Japan are boosting production as U.S. demand recovers and China demand continues to grow.

The benchmark indexes in Shanghai dropped to 14-month low after a private researcher lowered economic outlook. The news lowered indexes across Asia. ICBC posts 39% drop in new loan growth. Datang Power Changes sponsor for private placement. CITIC Bank and BBVA plan to set up independent private banking unit.

Stocks in Mumbai traded lower after a central bank official said interest rate may be revised higher to curb inflation. Weak sentiment in the region also contributed to the declines. Tata Motors plans to raise as much as $1 billion and Pantaloon Retail raised $100 million.

Stocks in Australia traded lower tracking losses in Shanghai, Hong Kong, Tokyo and Mumbai. Miners give two week notice to government to settle the super tax on profits. Hebei Steel and Atlas Iron Ltd talk a stake sale in Western Australia iron ore mine.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 123.27 or 1.27% to 9,570.67, Hang Seng index in Hong Kong decreased 477.78 or 2.31% to 20,248.90 and CSI 300 index in China lower 124.76 or 4.59% to 2,592.02. ASX 200 index in Australia decreased 38.80 or 0.88% to 4,345.70. The FTSE Bursa KL Composite index in Malaysia closed lower 5.70 or 0.43% to 1,319.84.

The Kospi Index in South Korea decreased 24.27 or 1.40% to close at 1,707.76. SET index in Thailand closed lower 5.31 or 0.66% to 799.09 and JSE Index in Indonesia decreased 62.36 or 2.11% to 2,893.37. The Sensex index in India decreased 240.17 or 1.35% to 17,534.09.

Europe Markets Review

In London FTSE 100 Index traded lower 165.94 or 3.27% to 4,905.74, in Paris CAC 40 Index traded decreased 139.85 or 3.91% to close at 3,436.60, in Frankfurt DAX Index traded lower 206.82 or 3.36% to close at 5,950.40. In Zurich trading SMI Index traded decreased 178.35 or 2.83% to close at 6,132.80.

Commodities, Currencies and Yields

Dollar edged higher against euro to $1.218 and fell against the Japanese yen to 88.50.

Crude oil decreased $0.21 to $75.73 a barrel for a front month contract, natural gas edged higher 1 cent to $4.56 per mBtu and gasoline decreased 1.06 cent to 206.14 cents.

Gold increased $1.10 in New York trading to close at $1,243.50 per ounce, silver closed lower $0.08 to $18.55 per ounce and copper for the front month delivery increased 1.70 cents to $2.94 per pound.

Yields on 10-year U.S. bonds declined to 2.94% and on 30-year U.S. bonds fell to 3.93%.