Fear Grips Global Markets on Growing Uncertaities in China and Europe

Nichole Harper
20 Aug, 2015
New York City

Fear began to set in global markets with oil flirting with new multi-year lows, deepening slowdown in China and continued uncertainty about the rate hike timing in the U.S. and growing instability in the euro zone. Kazakhstan currency plunged 25% and Vietnam devalued 1%.

[R]4:25 PM New York City, New York – Fear began to set in global markets with oil flirting with new multi-year lows, deepening slowdown in China and continued uncertainty about the rate hike timing in the U.S. and growing instability in the euro zone. Kazakhstan currency plunged 25% and Vietnam devalued 1%.[/R]

Market indexes on Wall Street declined for the third day in a row and S&P 500 index dipped to negative territory.

Trading sentiment was weak in New York on the growing instability in the euro zone after Greece’s prime minster said he will resign and oil plunged to a new six-year low but managed to close higher.

In New York oil closed up 34 cents to close at $41.14 after dipping below $41 and hitting a new 80-month low and Brent crude declined 1% to below $47 a barrel.

Kazakhstan’s tenge plunged more than 25% after the oil exporting country let it currency float and Vietnam devalued the dong by 1% against the dollar yesterday. Indian rupee traded near a record low and currencies in Malaysia, Indonesia and Thailand also weakened.

Three widely followed indexes, S&P 500, Nasdaq and Dow Jones dropped more than 2% and oil dropped to

Seasonally adjusted weekly jobless claims rose 4,000 to 277,000 from the previous week revised claims of 273,000, the Department of Labor said.

Seasonally adjusted annual rate for existing home sales in July jumped 2% to 5.59 million from downwardly revised 5.48 million in June and surged 10.3% from a year ago month, National Association of Realtors.

On Wall Street, Tollbooth Strategy Index slipped 113.95 or 1.1% to 10,751.06.

S&P 500 index dropped 31.75 or 1.5% to 2,047.81 and the Nasdaq Composite Index slumped 111.59 or 2.2% to 4,907.73.

Crude oil in New York rose 20 cents to $40.92 a barrel and gold surged $22.40 to $1,150.30 an ounce.

U.S. Movers

L Brands Inc ((LB)) increased 2.5% or $2.02 to $83.22 after the specialty retailer reported net sales in the second-quarter ending on August 1 jumped 3% to $2.77 billion from a year ago period.

Same store sales in the quarter advanced 4%.

Net income in the quarter surged 7.5% to $202.48 million or 68 cents per diluted share compared to $188.36 million or 63 cents from the same quarter last year.

The retailer forecasted earnings per share for the third-quarter between 40 cents and 45 cents.

For the year, the company lifted full-year earnings per share estimate in the rage of $3.58 to $3.73 compared to previous guidance of $3.50 to $3.70.

Sears Holdings Corp ((SHLD)) plummeted 4.7% or $1.10 to $22.24 after the specialty retailer reported revenues in the second-quarter ending on August 1 plunged 22.5% to $6.21 billion from a year ago period.

Kmart and Sears domestic same store sales in the quarter declined 7.3% and 14% respectively.

Net in the quarter swung to profit $208 million or $1.84 per diluted share compared to a loss of $573 million or $5.39 from the same quarter last year.

As of August 1, the company had cash balance of $1.8 billion and no revolver borrowings and letters of credit outstanding of about $657 million.

European Markets

U.K. retail sales volume in July increased 0.1% from June. Amount spent in the retail industry rose to £28.5 billion and online sales soared 13% from a year ago month, the Office for National Statistics said.

Seasonally adjusted external current account surplus declined to €12.3 billion in June compared to €13.3 billion in May and a deficit of €2.4 billion in a year ago month, the Statistical Office of the European Communities reported.

In London trading, FTSE 100 index fell 20.60 or 0.3% to 6,382.85 and in Frankfurt the DAX index dropped 138.42 or 1.3% to 10,543.73.

In Paris, CAC 40 index slumped 75.93 or 1.6% to 4,808.17.

Koninklijke Ahold N.V jumped 2.6% to 17.95 after the Netherlands-based supermarkets and convenience stores operator reported revenues in the first-half ending in June surged 15.9% to €19.98 billion from €17.24 billion a year ago period.

Net profit in the quarter more than doubled from a year ago to €408 million compared to €197 million and diluted earnings per share jumped to €0.48 from €0.42.

Asian Markets

Stocks in Tokyo declined following another week of volatile trading in Shanghai and weak commodities prices. Real estate information provider Next Co said quarterly revenues rose 58%. Nippon REIT said first-half sales and net rose more than 90%.[/R]

Stocks in Tokyo declined following another week of volatile trading in Shanghai and weak commodities prices.

The Nikkei 225 Stock Average slipped 189.11 or 0.9% to 20,033.52 and the broader Topix index slumped 24.60 or 1.5% to 1,623.88.

The yen eased to 123.83 against a dollar.

Fancl Corporation fell 0.8% to 1,807 yen after the cosmetics and nutritional supplements maker said total sales in July soared 13% to 7.25 billion yen from 6.42 billion yen in a year ago month.

Sales in cosmetic segment jumped 11.4% to 4.23 billion yen and sales in nutritional supplements business surged 18.5% to 2.40 billion yen and in other business sales increased 5.1% to 622 million yen.

For the year, total sales soared 20.9% to 29.37 billion yen compared to 24.28 billion yen in a year ago period.

Kobe Bussan Co Ltd slid 0.3% to 12,780 yen after the food ingredients retailer forecasted revenues for the fiscal year ending in October to jump 7% to 228 billion yen and net profit to soar 92% to 5 billion yen and same-store sales are estimated to increase 5%.

Stocks in Mumbai dropped and market indexes declined more than 1% after rupee traded near record low and volatile Chinese stocks dampened sentiment in Asian markets.

Market volatility perked up in Shanghai as investors accelerated selloff a day after central bank pumped more liquidity and investors worried that the Chinese economy may be slowing down faster than the recent economic data suggest.

Crude oil and copper declined to new six-year low on another day of volatile trading in China and the prospect of more economic slowdown.

The Reserve Bank of India granted provisional license to set up payment banks to 11 companies including, Reliance Industries, India Post, AB Nuvo, Bharti Airtel, Vodafone and Paytm.

The ''''in-principle'''' approval will be valid for of 18 months.

Rupee weakened 28 paisa to 65.54 against one U.S. dollar.

The Sensex Index dropped 323.82 or 1.2% to close at 27,607.82. The CNX Nifty slipped 122.40 or 1.4% to 8,372.75.

Adani Enterprises Limited slipped 2.3% to ₹83.25 and the company is in talks with Japan-based Softbank and Taiwan-based Foxconn to secure investment in a $3 billion solar panel project.