U.S., European Markets Struggle; Asian Markets Advance

Nichole Harper
03 Jun, 2014
New York City

U.S. stocks opened lower and the European Central Bank is considering additional liquidity measures to arrest the risks of negative price spiral. Asian markets closed higher as U.S. indexes closed up 2% in May, fourth monthly increase in a row. Factory orders rise slows to 0.7% in April.

[R]10:00 AM New York – U.S. stocks opened lower and the European Central Bank is considering additional liquidity measures to arrest the risks of negative price spiral. Asian markets closed higher as U.S. indexes closed up 2% in May, fourth monthly increase in a row.[/R]

Stocks opened lower on Wall Street and investors digested inflation report in the euro zone and reviewed the rising markets in Asia.

S&P 500 index declined 5.60 to 1,919.37 and the Nasdaq Composite Index dropped 18.37 to 4,218.83.

European Markets

Market indexes across the euro zone declined after the latest inflation report showed smaller than expected increase.

The inflation index fell to 0.5% rate in May from 0.7% in April, the Eurostat said in Luxembourg today. The inflation has been below 1% for eight months and the European Central Bank has inflation target just below 2%.

In a separate report the statistics agency said jobless rate declined to 11.7% in April from 11.8% in March.

The elevated unemployment is largely driven by weak economies in Greece, Spain, Italy and France.

The euro gained to $1.36 against the dollar after falling 0.3% in yesterday’s trading.

Asian Markets

Japanese stocks extended the advance for the ninth day in a row and the yen eased and comments from the Government Pension Investment Fund also spurred the index gain.

The Nikkei 225 Stock Average gained 98.33 or 0.7% to 15,034.25 and the broader Topix index rose 8.12 to 1,228.59.

The yen eased to 102.40 against one U.S. dollar.

The broader Topix index increased to close at a high not seen since March and then yen held after sliding 0.6% in yesterday’s closing following a report from the government controlled pension fund.

The chairman of the GPIF said in a report that allocation of as much as 20% to Japanese stocks is not too much. The comments were widely circulated and investors bid up stocks on the hope that the pension fund will increase exposure to Japanese stocks.

The Sensex Index climbed 467.51 or 1.9% to close at 24,684.85 The CNX Nifty jumped 132.55 to 7,362.50.

Australian stocks opened higher after the release of several economic reports but broader indexes dropped 0.7% at close.

The Reserve Bank of Australia decides to keep official cash rate at an historical low for the ninth meeting in a row.

The central bank left its key rate at 2.5% and reiterated its policy of “stable interest rates.” The move was widely anticipated and economists and investors so no sign of the change in the rate regime at the next meeting either.

The Australian Bureau of Statistics said seasonally adjusted retail sales in April rose 0.2% to $23.17 billion following gain of 0.1% in March.

The current account deficit in the first quarter declined to $5.67 billion following the downwardly revised deficit of $12.7 billion in fourth-quarter, the ABS said in a separate report.

The surge in iron ore and coal exports cut the current account trade significantly but exporters are also struggling with weak commodities prices. Iron prices in 2014 have declined 30% and the spot price of the ore is at a 20-month low.

U.S. Stocks in Review

Hillshire Brands Co soared 8.8% to $58.32 after the processed food maker said it will talk to bidders Tyson Foods Inc and Pilgrim’s Pride.

Pilgrim’s Pride lifted its offer for Hillshire to $55 a share from the first offer of $45 surpassing the $50 a share offer from Tyson.

Krispy Kreme plunged 13.5% to $16.45 after the retailer of doughnuts lowered its annual earnings per share outlook between 69 cents and 74 cents from the previous estimate of as much as 79 cents.

Quiksilver, Inc plunged 43% to $3.30 after the struggling retailer posted adjusted fiscal second quarter loss of 15 cents a share. The loss was larger than expected by 2 cents.

The retailer also reported sales of $408 million, $40 million less than expected and the company said sales in Europe and North America are expected to decline in the second half to October.