World Markets Slide 1% to 5% on Merger Monday

Bikram Pandey
23 Jul, 2012
New York City

Global markets plunged on the growing speculation that Spain may be forced to ask a larger bailout ans the crisis deepens. U.S. indexes closed down 1% and recovered from the earlier losses of 2% and European markets plunged between 3% and 5%. Pete

[R]4:00 PM New York – Global markets plunged on the growing speculation that Spain may be forced to ask a larger bailout and the crisis deepens to broader economy. U.S. indexes closed down 1% and recovered from the earlier losses of 2% and European markets plunged between 3% and 5%. Pete’s Coffee & Tea agreed to a $1 billion offer.[/R]

Stocks on Wall Street extended global decline and market indexes plunged nearly 2% at the opening in New York. World markets dropped sharply after new worries resurfaced and Spain may be forced to ask for a full bailout. The euro dropped to a new 2-year low.

Stocks recovered half the losses in steady gains and broader indexes in New York trimmed losses to 1%.

On merger Monday three deals totaling $17 billion in energy industry were announced today.

China based CNOOC Ltd agreed to acquire Canada-based Nexen for $15.1 billion and NRG and GenOn are in a $1.7 billion deal. Talisman Energy sells 49% equity interest in UK North Sea Assets.

In addition, DigitalGlobe and GeoEye agreed to merge and Genesee agreed to acquire RailAmerica for $1.39 billion.

Pete’s Coffee & Tea Inc agreed to go private for $977.6 million. German conglomerate John A. Benckiser that owns a majority stake in Coty, Inc agreed to pay 27.8% premium to Friday’s close or $73.05 a share.

On the earnings front, Halliburton second quarter net slid and McDonald’s second quarter net fell and the restaurant operator said comparable sales growth in third quarter may be slower than the increase in the second quarter.

Market indexes in Germany and France plunged more than 3% as Spanish yield soared to a new record. The indexes in Madrid plunged 3.8% and in Italy dropped 5%. Spain lowered economic outlook for next year. China-based Citic agreed to buy CLSA from Credit Agricole for $1.25 billion.

The Spanish economy contracted for the third quarter in a row. Swiss broad money supply growth rose and Luxembourg''s unemployment rate remained unchanged in June. Danish consumer confidence strengthened in July.

UK indexes extended world markets decline as the debt crisis in the euro zone resurface and the Libor scandal widens to regulators. UK household finance index rose in July and manufacturing sector is expected to contract this year.

Nikkei index in Tokyo plunged the most in six weeks in light trading as investors lowered expectations in the euro zone as Spanish crisis broadens in the economy. Print makers declined after Xerox lowered its outlook. Resources linked stocks fell.

Australian indexes plunged 1.7% as markets in Asia declined. World markets turned cautious after fears rose that Spain may be sliding towards a full blown bailout as crisis moves from the banking industry turmoil to economic decline.

Commodities, Bonds and Currencies

The yield on 10-year bond traded lower to 1.43% and on 30-year bond decreased to 2.51%.

The U.S. dollar inched higher to $1.213 to a euro and decreased against the Japanese yen to 78.39 yen.

Immediate delivery futures of Texas crude oil decreased $3.47 to $88.36 a barrel and Brent crude fell $3.26 to $103.55, futures of natural gas rose 0.03 cents to $3.11 per mbtu and gasoline price decreased 6.05 cents to 288.25 cents a gallon.

In metals trading, copper decreased 7.05 cents to $3.37 per pound, gold gained $6.80 at $1,576.10 per ounce and silver fell 29 cent to $27.00.