Global and U.S. Markets Extend 1% Loss to Second Day

Nichole Harper
24 Jan, 2014
New York City

World markets and U.S. indexes extended losses of more than 1% for the second day in a row after emerging-markets currencies contagion widen. Microsoft reported record quarterly sales and earnings. Bristol-Myers quarterly sales rose 6% but net plunges 22%. European banks closed lower.

[R]11:55 AM New York – World markets and U.S. indexes extended losses of more than 1% for the second day in a row after emerging-markets currencies contagion widen. Microsoft reported record quarterly sales and earnings. Bristol-Myers quarterly sales rose 6% but net plunges 22%. European banks closed lower.[/R]

World markets extended losses for the second day in a row as emerging-market currencies plunge on the rising chaos in Argentina, Thailand, Turkey, Ukraine and Venezuela.

Argentina devalued its currency to stem capital flight and lowered some of the restrictions for foreign currency transaction. The peso traded at 7.75 against one dollar but traded at 13.10 against a dollar in non-official transactions.

Argentina’s foreign exchange reserves has fallen to $29 billion at the beginning of the year from $52 billion.

Turkish lira dropped to a new record low and declined every-day of the year and fell 10% against the U.S. dollar in last five weeks of trading.

Lira declined despite the central bank selling $2 billion of foreign currencies as political crisis grinds on.

Ukraine’s hryvnia dropped nearly every day in the month so far and the currency declined to a record low of 8.45 against one dollar as protest turns violent in Kiev and central bank exhausted half of its foreign reserve this month.

Venezuela also partially devalued its currency on Wednesday, lowered the bolivar to 11.3 against one dollar for transactions including remittances compared to official exchange rate of 6.3 to a dollar.

Unofficial rate on the street in Caracas is as high as 80 to a dollar.

S&P 500 index declined 1.5% or 26.59 to 1,801.87 and the Nasdaq Composite Index declined 1.8% or 73.85 to 4,145.03.

European Markets

In European trading, Spanish banks were in focus after Argentina devalued and eased some of the restriction on foreign transactions to stem the outflow of funds.

Emerging-market currencies accelerated the decline and Swiss Franc and the euro strengthened after Turkish lira and Ukraine’s hryvnia dropped to a record low.

Banco Bilbao Vizcaya Argentaria SA dropped 5% and Banco Santander decreased 2%.

In London trading, FTSE 100 index fell 1.5% or 104.2 to 6,669.46 and in Frankfurt the DAX index dropped 2.3% or 221.1 to 9,410.40.

In Paris, CAC 40 index dropped 2.5% or 107.6 to 4,173.02.

U.S. Stocks in Review

Bristol-Myers Squibb Company ((BMY)) dropped 3.2% or $1.74 to $52.21 after the biopharmaceutical company reported total revenues in the fourth-quarter ending in December advanced 6% to $4.44 billion.

Net earnings in the quarter plunged 22% to $726 million or 44 cents a diluted share compared to $925 million or 56 cents.

Microsoft Corporation ((MSFT)) gained 1.8% or 66 cents to $36.72 after the software company reported revenue in the second-quarter soared 13.9% to $24.5 billion.

Net income in the quarter grew 2.8% to $6.56 billion or 78 cents a diluted share compared to $6.38 billion or 76 cents.

The Procter & Gamble Company ((PG)) soared 3.4% or $2.67 to $80.90 after the consumer products maker said net sales in the fourth-quarter ending in December nearly flat to $22.3 billion.

Net income in the quarter plunged 16% to $3.43 billion or $1.18 a diluted share compared to $4.06 billion or $1.39.