IMF Lowers U.S. Outlook, Oil Advances on Continued Violence in Iraq

Nichole Harper
16 Jun, 2014
New York City

U.S. stocks declined after the IMF lowered its assessment of the U.S. economic outlook. Oil and gold rose after violence in Iraq intensified and Russia cutoff natural gas supplies to Ukraine.

[R]11:40 AM New York – U.S. stocks declined after the IMF lowered its assessment of the U.S. economic outlook. Oil and gold rose after violence in Iraq intensified and Russia cutoff natural gas supplies to Ukraine.[/R]

U.S. stocks traded sideways and commodities markets gained the attention after gold and oil rose as violence in Iraq spread.

Fighting between rebels and Iraqi army intensified but rebels continue to control the second largest city in Iraq and the prospect of oil supply disruption rose in the second largest oil producing nation in the OPEC.

S&P 500 traded up 3.57 to 1,939.73 and the Nasdaq Composite Index gained 8.14 to 4,318.86.

Oil futures for immediate month delivery increased 10 cents to $107.01 and traders are speculating the most traded commodity in the world may cross $110 a barrel as early as this month.

Gold edged lower 10 cents after surging as much as $1 in early trading $1,274 an ounce and copper gained 1.95 cents to 304.70 an ounce.

The IMF lowered its assessment of the U.S. economic growth in 2014 but held its outlook for 2015.

The European controlled IMF lowered U.S. economic outlook to 2% from earlier assessment in April of 2.8%. The multi-lateral agency held its outlook at 3% and said that the Federal Reserve may be able to keep interest rate near zero for a longer time.

European Markets

European markets trended lower with the rising violence in Iraq and the continued struggle in the Eastern region of Ukraine.

Russia controlled OAO Gazprom cut off gas supplies to Ukraine after the oil company said it has not received payments by the deadline set for this morning.

The oil company will continue to supply oil to customers in the European Union but the gas monopoly said future supplies may be disrupted.

In London trading, FTSE 100 index slid 0.1% or 6.13 to 6,771.72 and in Frankfurt the DAX index closed flat at 9,912.86.

In Paris, CAC 40 index fell 0.3% or 14.35 to 4,528.93.

Mitchells & Butlers agreed to acquire rival operator Orchid Group for £266 million in cash. Ladbrokes extended the current bank loan facility. Vodafone agreed to acquire Italy-based Cobra Automotive Technologies for €145 million.

Asian Markets

Tokyo stocks declined after a 3-week rally and the yen advanced on the rising prospects of a U.S. airstrike in Iraq. Fighting intensified in Iraq and the oil prices extended gains for the third week in a row.

Stocks in Tokyo closed lower and rising tensions in Iraq lifted the yen and stocks in technology and automakers led the decliners.

The Nikkei 225 Stock Average slipped 164.55 or 1.1% to 14,933.29 and the broader Topix index fell 9.29 to 1,234.68. The Topix had rebounded 7.4% in the last three weeks, but the index is still the worst performer among developed market indexes in the year so far.

The yen rose and close at 101.74 against one U.S. dollar.

Investors focused on the worsening violence and the prospect of a U.S. air strike rose as violence intensified between the rebels and Iraqi army.

Market indexes in India edged lower after a two month of solid gains that lifted the index to a record high and the Sensex advanced 19% in the year so far.

The Sensex Index fell 37.69 to close at 25,190.48 The CNX Nifty slid 8.55 to 7,533.55.

State controlled companies revved up capital raising plans after the installation of new government in New Delhi and the rupee advanced for the third week in a row.

Bank of India is planning to raise nearly $1.5 billion. GAIL reduced its stake in Dahej, Gujarat based petrochemical project controlled by ONGC. Net 4 India net swung to a loss. TCS lowered its quarterly outlook.