China Worries Overwhelm World Markets; Oil and Copper at 6-Year Low

Nichole Harper
19 Aug, 2015
New York City

World financial markets declined after volatile Chinese stocks raised the prospect of larger than expected economic slowdown. Oil and copper traded at new six-year lows. German lawmakers approved third Greek bailout.

[R]1:55 PM New York City, New York – World financial markets declined after volatile Chinese stocks raised the prospect of larger than expected economic slowdown. Oil and copper traded at new six-year lows. German lawmakers approved third Greek bailout.[/R]

Market indexes in New York and across Europe dropped after volatile stocks in China overshadowed local news.

Shanghai index plunged as much as 5% before recovering to close up 1.2% after central bank decided to inject more liquidity. However, markets in Asia and around the world declined on the growing worries that Chinese economy may be in weaker conditions that the economic data suggest.

Oil and copper declined to new six-year lows on the worries that the demand in China is slowing down.

The index of consumer prices in July increased 0.1% from June. For the year, all item index before seasonal adjustment rose 0.2%, the Department of Labor said.

On Wall Street, Tollbooth Strategy Index decreased 100.91 or 0.9% to 10,820.38.

S&P 500 index dropped 22.35 or 1.1% to 2,074.58 and the Nasdaq Composite Index slipped 54.79 or 1.1% to 5,004.82.

Crude oil in New York declined $1.70 to $40.92 a barrel and gold soared $11.20 to $1,128.10 an ounce.

U.S. Movers

Lowe''s Companies, Inc ((LOW)) rose 13 cents to $73.13 after the home improvement retailer reported net sales in the second-quarter ending in July jumped 4.5% to $17.4 billion from a year ago period.

Comparable store sales in the quarter increased 4.3% comparable sales for U.S. home improvement business gained 4.6%.

Net income in the quarter soared 8.4% to $1.13 billion or $1.20 per diluted share compared to $1.04 billion or $1.04 from the same quarter last year.

Lowe''s estimated total sales estimated to increase 4.5% to 5% and comparable sales are forecasted to increase 4% to 4.5% and diluted earnings per share of about $3.29.

Target Corporation ((TGT)) increased 48 cents to $80.78 after the discount stores operator reported net sales in the second-quarter ending on August 1 advanced 2.8% to $17.43 billion from a year ago period.

Same store sales in the quarter increased 2.4%.

Net income in the quarter surged 222% to $753 million or $1.18 per diluted share compared to $234 million or 37 cents from the same quarter last year.

For the third-quarter, Target forecasted earnings per share in the range of 79 cents to 89 cents from 79 cents reported in the same period a year ago.

For the year, the retailer lifted estimated earnings per share between $4.60 and $4.75 compared to earlier estimated range of $4.50 to $4.65.

Separately, Target agreed to reimburse up to $67 million to settle Visa claims in connection to massive data breach of 40 million debit and credit cards during the holiday shopping season in 2013.

The company also negotiates with MasterCard Inc in the same matter.

European Markets

German lawmakers overwhelmingly approved third Greek bailout and Dutch and other lawmakers are set to vote in favor as well. The approval will allow Greece to make a loan repayment to the European Central Bank later this week.

Seasonally adjusted construction activities in June fell 1.9% in euro area and 1.1% in the wider region of EU28 compared to a month ago.

In May, activities in EU area rose 0.2% but fell 0.2% in the EU28, the statistical office of the European Communities reported.

In London trading, FTSE 100 index slumped 77.02 or 1.2% to 6,449.36 and in Frankfurt the DAX index declined 183.70 or 1.7% to 10,730.05.

In Paris, CAC 40 index dropped 55 or 1.1% to 4,915.29.

Carlsberg A/S plunged 7.4% to 577.50 kronor after the Denmark-based brewing company reported net revenues in the first-half ending in June rose 1.1% to 32.40 billion kronor from 32.06 billion kronor in a year ago period.

Net profit in the period tumbled 29.9% form a year ago to 1.50 billion kronor compared to 2.14 billion kronor and diluted earnings per share slipped to 11.4 kronor from 14.7 kronor.

Glencore Plc declined 8.9% to 160.50 pence after the Switzerland-based natural resource company reported revenues in the first-half ending in June plummeted 24.9% to $85.71 billion from $114.06 billion in a year ago period.

Net in the period swung to a loss from a year ago to $676 million compared to profit of $1.72 billion and diluted loss per share swung to a 5 cents from 13 cents.

Glencore would take a further $790 million write down on its about $1.56 billion acquisition of a Chad-focused oil company that it acquired in last year.

Asian Markets

Nikkei average in Tokyo dropped to a five-month low after another slide in Shanghai stocks and trade deficit widened. Kirin acquired 55% stake in the government controlled brewery in Myanmar. Toshiba Corp soared 8% after forming new board.

Stocks in Tokyo dropped following another slide in Shanghai stocks and raising concerns about the stability of the Chinese economy.

Market indexes dropped to a five-month low and trade deficit widened in July.

The trade deficit in July widened to 268.06 billion yen compared to downwardly revised 70.5 billion yen deficit in June, the Ministry of Finance said.

Exports in the month jumped 7.6% following a 9.5% increase in June and import dropped 3.2% followed by 2.9% decrease a month earlier.

The Nikkei 225 Stock Average declined 331.84 or 1.6% to 20,222.63 and the broader Topix index slumped 23.74 or 1.4% to 1,648.48.

The yen eased to 124.23 against a dollar.

Kirin Holdings Co Ltd decreased 1.6% to 1.811.50 yen after the alcoholic and soft drinks maker agreed to acquire 55% stake in Myanmar’s state-backed Myanmar Brewery Limited for about 69.7 billion yen or $560 million.

SoftBank Group Corp gained 0.6% to 7,477 yen after the communication company’s president and chief operating officer Nikesh Arora would buy the company''s shares worth about 60 billion yen or $483 million in the open market in next six months.

Separately the company increased its stake in the U.S.-based unprofitable wireless operator Sprint Corporation for second time in this month for about 7.51 billion yen or $73 million for the stock of 16.8 million shares.

Stocks in Mumbai rebounded after two days of losses and pharmaceuticals and software exporters led the gainers on the expectations of rising sales.

Rupee strengthened 5 paisa to 65.26 against one U.S. dollar.

The Sensex Index increased 100.10 or 0.4% to close at 27,931.64. The CNX Nifty rose 28.60 or 0.4% to 8,495.15.