U.S. Indexes Struggle on Volatile Oil and Greek Confrontation

Nichole Harper
09 Feb, 2015
New York City

U.S. stocks turned volatile after European markets dropped as the region

[R]12:50 PM New York – U.S. stocks turned volatile after European markets dropped as the region’s spar over Greek crisis and struggle to negotiate a settlement for the Ukraine conflict. Oil rose as much as 1% after OPEC lowered its estimate of oil supply growth.[/R]

Market indexes traded sideways but stayed near the Friday’s close after Greece-risk resurfaced.

Greece and European Union, European Central Bank and international lenders are heading for confrontation as neither party is willing to work on a compromise. Market indexes in Europe fell as much as 2% and knocked off all the enthusiasm in New York trading.

On Wall Street trading, Tollbooth Strategy Index edged down 0.1% or 13.17 to 10,201.72.

S&P 500 index fell 2.23 or 0.1% to 2,053.25 and the Nasdaq Composite Index slid 2.49 or 0.05% to 4,742.

Separately, oil complex stocks traded higher briefly after Organization of the Petroleum Exporting Countries lowered its estimate of oil supply growth.

The latest Baker Hughes report released last Friday showed that the total U.S. oil drilling rig count declined from the peak of 1,609 in June of 2014 to 1,140 at the end of last week. However, the oil production has not declined with the fall in operating rig count.

Crude oil in London extended its 20% rebound in the last two weeks by 1% to $58.36 a barrel and in New York prices rose $1.52 to $53.24.

U.S. Movers

CNA Financial Corp ((CAN)) gained 2.9% or $1.20 to $41.70 after the insurance company reported total revenues in the fourth-quarter ending in December declined 7% to $2.39 billion from a year ago period.

Net income in the quarter plunged 10% to $198 million or 73 cents a diluted share compared to $221 million or 82 cents from the same quarter last year.

Hasbro, Inc ((HAS)) climbed 6.7% or $3.71 to $59.45 after the toy and entertainment products maker stated net revenues in the fourth-quarter ending on December 28 rose 1.5% to $1.30 billion from a year ago period.

Net income in the quarter soared 13.1% to $169.9 million or $1.34 per diluted share compared to $129.8 million or 98 cents from the same quarter last year.

McDonald''s Corporation ((MCD)) dropped 1.3% or $1.19 to $92.80 after the quick service restaurant operator reported global same-store sales in January declined 1.8% and sales in the Asia/Pacific, Middle East and Africa region plunged 12.6%.

In January, comparable U.S. increased 0.4% and in the European region rose 0.5% while system-wide sales for the month decreased 7.9%.

European Markets

European markets opened sharply lower and quickly dropped to as low as 2% after Greece and Ukraine talks dominated headlines.

Market sentiment was weak at the opening after Prime Minister Alexis Tsipras on Sunday confirmed that his government has not abandoned its plan to demand a rollback of austerity plan required as a part of international bailout.

In London trading, FTSE 100 index fell 0.5% or 36.59 to 6,816.85 and in Frankfurt the DAX index declined 1.6% or 172.45 to 10,673.94.

In Paris, CAC 40 index dropped 1.2% or 55.14 to 4,635.89.

The ASE Index in Athens dropped as much as 6% and market indexes in Italy and Spain declined more than 2%. Greek banks plunged more than 10%.

Greek 10-year bond yield increased three full points to 21.65%, the largest one-day increase in three years.

The bond market tensions rose as at least six governments bonds are scheduled to raise at least 19 billion euros.

The Netherlands is planning to raise as much as 3 billion euro bonds maturing in 2020 on Tuesday and Portugal is planning to a debt offering of as much as 1.25 billion euros of bonds expiring in 2025.

Separately, German Chancellor Angela Merkel was negative on the likelihood of ending Ukraine crisis in the immediate future.

Russia’s Foreign Minister Sergie Lavrov said at a conference in Munich, Germany that the U.S. sending arms to support Ukraine will deepen the crisis.

Air France KLM SA dropped 2.8% to €7.18 after the airline company said traffic in January dropped 1.7% on Asia weakness and group passenger traffic fell 0.1% with a 0.8% increase in capacity.

The total number of passengers jumped to 1.4% to 6.19 million.

Total load factor in January slipped 0.8% to 82.4% from 83.2% in the same month a year ago.

For the month, total group traffic declined marginally to 18.95 billion revenue pax-kilometers compared to 18.98 billion a year ago month.

Asian Markets

Stocks in Tokyo closed down after the yen weakened and investors worried of gathering storms in the euro zone.

Greece stood firm on its plan to roll back austerity as agreed by the previous government with the international lenders and Ukraine crisis deepens.

Stocks in Tokyo closed down after the yen weakened and Greece reaffirmed its commitment to rolling back austerity measures.

The Nikkei 225 Stock Average gained 63.43 or 0.4% to 17,711.93 and the broader Topix index rose 7.73 to 1,424.92.

Current account surplus in the year narrowed 18.8% to 2.63 trillion yen from 3.23 trillion yen a year ago, according to preliminary report released by finance ministry.

Exports in the year jumped 9.3% to 74.12 trillion yen and imports climbed 10.3% to 84.49 trillion yen from a year ago period.

The trade balance reflected a deficit of 395.6 billion yen followed by 636.8 billion yen deficit in the previous month.

In December, current account surplus narrowed to 187.2 billion yen compared to 433 billion yen surplus in November.

Exports in the month surged 19.3% to 7.1 trillion yen accelerating from 10.8% gain a month earlier and imports climbed 6.7% to 7.50 trillion yen after increasing 2.2% in November.

The Bank of Japan reported bank lending in January was up 2.5% on year and total outstanding loans stood at 487.17 trillion yen.

The growth in loans outstanding decreased from 2.6% gain in December.

The yen eased to 118.95 against one dollar.

Stocks in Mumbai fell sharply after exit polls suggested that ruling BJP is likely to lose to Aam Admi Party in Delhi legislative election.

Arvind Kejriwal led AAP is estimated to win absolute majority and Bhartiya Janata Party is likely to be the second largest party in the Delhi governing council.

Congress, the party that ruled Delhi for more than ten years to 2013 is likely to get as few as 5 seats in a 70-seat legislature.

Rupee also eased after weaker than expected earnings from L&T and Apollo Tyres and foreign investors sold net ₹96.45 crore according to preliminary data from regulatory agency.

Indian rupee closed down 38 paisa to 62.07 against one dollar.

The Sensex Index declined 490.52 or 1.7% to close at 28,227.39. The CNX Nifty dropped 134.70 or 1.6% to 8,526.35.

GAIL (India) Limited dropped 4.5% to ₹400.95 after the gas utility provider reported net in the third-quarter tumbled 64.03% to ₹604.08 crore.

Total revenues fell 6.66% to ₹14,969.41 crore.

Larsen & Toubro Limited plunged 6.6% to ₹1,573 after the engineering infrastructure contractor said net in the third-quarter slipped 14.58% to ₹1,059.80 crore.

Total revenues rose 5.37% to ₹15,616.91 crore.