U.S. Stocks and Oil Drops, IMF Cuts Global Economic Outlook

Nichole Harper
20 Jan, 2015
New York City

Stocks in New York declined and crude oil fell and gold gained. European markets advanced. IMF lowered its global growth outlook and said U.S., Canada and India are likely to sustain expansion while Russia, Brazil and the euro zone struggles and China faces a slowdown.

[R]12:15 PM New York – Stocks in New York declined and crude oil fell and gold gained. European markets advanced. IMF lowered its global growth outlook and said U.S., Canada and India are likely to sustain expansion while Russia, Brazil and the euro zone struggles and China faces a slowdown.[/R]

Stocks on Wall Street declined after crude oil priced turned lower and gold soared and IMF lowered its estimate of glow growth.

In addition, investors also reviewed the latest cut in global economic growth outlook to 3.5% from the previous estimate in October of 3.7% released by the International Monetary Fund.

The IMF estimated U.S. economic growth of 2.4% in 2014 and increase to 3% in 2015 but estimated slowdown in China, Russia and Brazil.

India is expected to accelerate its growth and current development policies are implemented the third largest economy in Asia may surpass China’s economic growth in 2016.

Separately, China reported economy grew at the slowest pace in 24 years and growth in 2014 slowed to 7.4% after expanding at 7.7% in 2013.

The growth slowed as local governments and corporation struggle under heavy debt load and China takes steps to cut lending growth.

In addition, International Monetary Fund today estimated China’s growth to slow down further to 6.8% in 2015 and may drop below 6.5% in 2016.

On Wall Street trading, Tollbooth Strategy Index fell 0.4% or 35.01 to 9,792.30.

S&P 500 index slipped 10.65 or 0.5% to 2,008.77 and the Nasdaq Composite Index dropped 23.39 or 0.5% to 4,611.

In New York, crude oil declined $2.05 or 4% to $46.64 and in London oil futures of Brent variety fell 38 cents to $48.85 a barrel.

Gold jumped $15.50 or 1.2% to $1,292.40 an ounce and copper 1.9% or 4.90 cents to $2.568 an ounce.

U.S. Movers

Delta Air Lines, Inc ((DAL)) climbed 4.6% or $2.11 to $47.94 after the airline company said total revenues in the fourth-quarter ending in December jumped 6% to $9.65 billion from a year ago period.

Net in the quarter swung to a loss of $712 million or 56 cents a diluted share compared to profit of $8.45 billion or $9.89 from the same quarter last year.

The company said GAAP tax benefit in the quarter of $428 million, down $7.6 billion from the quarter ended in December 2013, due to the release of the company''s tax valuation allowance at the end of 2013.

Johnson & Johnson ((JNJ)) dropped 2.8% or $2.95 to $101.12 after the health care product maker reported sales in the fourth-quarter ending in December fell 0.6% to $18.25 billion

Net earnings in the quarter plunged 28.4% to $2.52 billion or $1.27 a diluted share compared to $3.52 billion or $1.24 from the same quarter last year.

Morgan Stanley ((MS)) fell 1.7% or 59 cents to $34.30 after the financial service provider said reported net revenues in the fourth-quarter ending in December fell 1% to $7.76 billion from a year ago period.

Net income in the quarter surged to $920 million or 47 cents a diluted share compared to $36 million or 2 cents from the same quarter last year.

European Markets

European markets advanced for the fourth day in a row ahead of European Central Bank meeting later this week.

Investors are factoring the announcement of bond buying program of at least €500 billion and provide higher liquidity and ward off anchoring deflationary trends in the euro zone.

In London trading, FTSE 100 index gained 0.7% or 43.14 to 6,628.67 and in Frankfurt the DAX index rose 0.1% or 12.80 to 10,255.15.

In Paris, CAC 40 index jumped 1.3% or 57.03 to 4,451.96.

SAP SE declined 4.7% to €54.79 after the enterprise application provider said total revenues in the fourth-quarter ending in December climbed 7% to €5.46 billion from €5.11 billion a year ago period.

Net profit in the quarter dropped 1% from a year ago to €1.30 billion compared to €1.32 billion and basic earnings per share slid 1% to €1.09 from €1.11.

SAP forecasted revenues in fiscal 2015 from cloud subscriptions and support segment may surge as much as 86% in the range of €1.95 billion and €2.05 billion.

The company applies its own accounting method for the guidance that differs from international financial standards.

Unilever N.V slid 0.09% to €34.72 after the Netherland-based personal and home care product maker reported revenues in the year ending in December dropped 2.7% to €48.44 billion from €49.80 billion a year ago period.

Net profit in the year jumped 5% from a year ago to €5.52 billion compared to €5.26 billion and diluted earnings per share advanced 8% to €1.79 from €1.66.

Asian Markets

Nikkei index in Tokyo soared 2.1% and extended gains for the second day in a row and the yen weakened. Itochu and Thailand based Charoen Pokphand Group filed to acquire 10% stake in China controlled Citic.

Stocks in Japan advanced for the second day in a row and the yen eased ahead of the Bank of Japan policymakers’ two-day meeting that began today.

In addition, investors also reviewed the latest cut in global economic growth outlook to 3.5% from the previous estimate in October of 3.7% released by the International Monetary Fund.

The IMF also estimated Japan’s economy to expand at 1.4% in 2014 and slowdown to 1% in 2015 and inflation to fall from 2.8% to 1.7% in the two corresponding years.

The Nikkei 225 Stock Average climbed 352.01 or 2.1% to 17,366.30 and the broader Topix index jumped 25.22 or 1.8% to 1,397.63.

The yen slipped to close at 118.41 against one dollar.

In Mumbai trading, Sensex Index climbed 522.66 or 1.9% to close at 28,784.67. The CNX Nifty jumped 144.90 or 1.7% to 8,695.60.

Stocks in Mumbai soared and Sensex index closed at a new record high after IMF estimated growth to accelerate in India.

International Monetary Fund estimated economic growth to accelerate 6.5% in the fiscal year ending in March 2017, fastest among 20 industrialized nations.

Global investors have been optimistic on India’s growth prospect after the election of Narendra Modi government.

Around the world, India is one of the few nations that offer better and growing economic backdrop with the euro zone and Japan struggling with deflation forces and China slowing down economic expansion and Federal Reserve in the U.S. is winding down monetary stimulus after five years.

Brazil, Russia and Middle Eastern nations are battling a sharp plunge in oil and commodities prices.

Indian rupee edged down to close at 61.69 against one dollar.

Hindustan Zinc increased 0.8% to Rs 161.60 after the zinc producer reported net in the third-quarter surged 38.11% to Rs 2,379.37 crore.

Net revenues soared 20.42% to Rs 4,665.29 crore.

Kansai Nerolac Paints Ltd advanced 3.6% to Rs 2,345.65 after the company signed a joint venture agreement with Capital Holdings Maharaja to begin operations in Sri Lanka.

Kotak Mahindra Bank Limited rose 0.5% to Rs 1,396.25 after the financial service provider said net in the third-quarter climbed 36.63% to Rs 464.52 crore.

Net revenues jumped 20.15% to Rs 2,994.20 crore.