Wall Street Struggles with Large Losses, Global Sell-off Intensifies in Asia

Nichole Harper
24 Aug, 2015
New York City

Global markets extended losses in the second week and oil dropped to a new low in 2015. Volatile markets in New York saw wild price swings and markets indexes pared losses but market turmoil is likely to continue in the week.

[R]2:15 PM New York City, New York – Global markets extended losses in the second week and oil dropped to a new low in 2015. Volatile markets in New York saw wild price swings and markets indexes pared losses but market turmoil is likely to continue in the week.[/R]

In volatile and chaotic trading on Wall Street market indexes opened down between 5% and 8% on the growing worries about health of the Chinese economy and lack of growth in the euro zone.

Market indexes staged a slow and steady recovery and pared losses but at mid-day indexes turned lower and registered losses between 2% and 3%.

The second week of global market sell-off led to more declines in Asia and Europe after Shanghai markets plunged 8.4% and turned negative for the first time in the year. Indexes in Japan, India and Australia dropped between 4% and 6% and emerging market currencies took another hit.

On Wall Street, Tollbooth Strategy Index declined 246.90 or 2.4% to 9,995.43 before recovering to 66.04 points decline to 10,176.16

S&P 500 index dropped 27.19 or 1.4% to 1,942.33 and the Nasdaq Composite Index slumped 53.03 or 1.1% to 4,654.40.

Crude oil in New York declined $1.87 to $38.58 a barrel and gold added $1.30 to $1,160.90 an ounce.

U.S. Movers

Belk Inc ((BLKIA)) plunged 14.4% or $11.25 to $66.75 after the family owned fashion stores operator agreed to be acquired by private-equity firm Sycamore Partners in a deal valued of about $3 billion.

Under the terms, shareholders of the department store chain will receive $68 per share in cash.

The transaction is expected to close in the fourth-quarter.

Medivation Inc ((MDVN)) dropped 4.3% or $3.89 to $87.54 biopharmaceutical group agreed to acquire worldwide rights of talazoparib (formerly BMN 673) from BioMarin Pharmaceutical Inc for about $410 million.

Southern Company ((SO)) slipped 3.7% or $1.71 to $44.08 after the public utility provider agreed to acquire AGL Resources Inc for about $12 billion.

AGL shareholders will receive $66 in cash for each share, represents premium of 36.3% over the average stock price from last 20 trading days through August 21.

The transaction is expected to close in the second-half of the next-year.

Shares of AGL Resources Inc surged 32.6% to $63.50.

European Markets

In London trading, FTSE 100 index declined 223.98 or 3.7% to 5,955.80 and in Frankfurt the DAX index dropped 358.11 or 3.6% to 9,763.18.

In Paris, CAC 40 index slumped 185.92 or 4% to 4,446.12.

Amlin Plc slumped 2.2% to 488.80 pence after the U.K.-based insurance company reported gross written premium in the first-half ending in June jumped 6.3% to £2.01 billion from £1.89 billion in a year ago period.

Net profit in the period fell 2.3% from a year ago to £133 million compared to £136.1 million and diluted earnings per share slipped to 26.1 pence from 26.8 pence.

Amlin rejected media report that it is in talk to sell its business for a $5 billion.

Balfour Beatty Plc dropped 4.5% to 252.55 pence after the U.K.-based infrastructure developer and Morgan Sindall and BAM Nuttall secured a contract worth £416 million to construct part of London’s new ‘super sewer’, the Thames Tideway Tunnel, for Bazalgette Tunnel Limited.

The project includes design, construction, commissioning and maintenance for a two to five year period following construction completion.

Costain Group Plc gained 0.5% to 371.75 pence after the U.K.-based engineering solutions provider awarded the £605 million contract for the East works package of the Thames Tideway Tunnel in London in along with VINCI Construction Grands Projets and Bachy Soletanche Ltd.

The project of 40% share by Costain will commence work immediately and expected to complete in 2023.

Asian Markets

Nikkei average in Tokyo plunged 4.6% following Asia-wide correction for the second week in a row. The reference index has now fallen more than 10% from the 2015-high. Shanghai index plunged 8.4% and turned negative for the year.

Worldwide sell-off dragged market averages in Tokyo for the second week after indexes in Shanghai dropped sharply and in overnight trading stocks plunged in New York and in Europe.

The Nikkei 225 Stock Average tumbled 895.15 or 4.6% to 18,540.68 and the broader Topix index declined 92.14 or 5.9% to 1,480.87.

The yen eased to 121.03 against a dollar.

World markets have been fragile for the several month on the stretched valuations in developed markets, weakening commodities prices and lack of growth in the euro zone.

In addition, emerging markets suddenly faced currency war after China devalued currency two weeks ago and foreign investors are estimating that the economy is slowing down faster than the government data suggest.

Shanghai SSE Composite Index plunged 8.4% and fell in the negative territory for the first time in the year. The index has not plunged 40% from the peak in June and is down 0.8% year-to-date.

India’s stock market indexes plunged nearly 6% on Monday, posting their largest one-day decline since January 2009.

Rupee weakened 82 paisa to 66.64 against one U.S. dollar.

The Sensex Index tumbled 1624.51 or 5.9% to close at 25,741.56. The CNX Nifty declined 490.92 or 5.9% to 7,809.

For the year so far, the Sensex has dropped more than 9% from its recent peak in July and struggled to rebound from its low in mid-June.