Resurgent Volatility in Global Markets, Wild Swings on Wall Street

Nichole Harper
26 Aug, 2015
New York City

Stability remained elusive in global markets for the seventh day in a row as market indexes extend recent losses from peaks to between 12% and 15%. U.S. stocks are in their first decline of more than 10% since 2011. After wild swings, Shanghai markets closed down 1.3%.

[R]1:25 PM New York City, New York – Stability remained elusive in global markets for the seventh day in a row as market indexes extend recent losses from peaks to between 12% and 15%. U.S. stocks are in their first decline of more than 10% since 2011. After wild swings, Shanghai markets closed down 1.3%.[/R]

Wild swings in global markets persisted for the seventh day and indexes on Wall Street opened sharply higher and quickly began to slide lower.

Market indexes opened up as much as 3% and steadily declined and pared gains to 1% by mid-day.

U.S. market averages have corrected more than 10% for the first time since 2011.

After the close on Tuesday, S&P 500 index has dropped 12.4% from its recent high, Dow Jones has fallen 14.5% and the Nasdaq composite has declined 13.6%.

Smaller companies focused Russell 2000 has plunged 14.8% and the Tollbooth Strategy index has declined 13% from the high in May.

Durable goods orders in July jumped 2% to $241.1 billion followed 4.1% increase in June.

Orders excluding transportation grew 0.6% and defense increased 1%, the Department of Commerce said.

Durable goods orders had fallen in four of the previous five months and the road ahead for manufacturers may not be easy.

Strengthening dollar, weakening oil prices, soft demand in Europe and turbulent China are some of the headwinds faced by the sector.

On Wall Street, Tollbooth Strategy Index jumped 150.31 or 1.5% to 9,970.31.

S&P 500 index gained 14.94 or 0.8% to 1,882.32 and the Nasdaq Composite Index jumped 33.74 or 0.8% to 4,540.66.

Crude oil in New York fell 26 cents to $39.05 a barrel and gold declined $14.80 to $1,123.50 an ounce.

U.S. Movers

Monsanto Company ((MON)) soared 8.2% or $7.33 to $96.75 after the agricultural products provider said it was abandoning offer to buy the Switzerland-based Syngenta AG for 470 Swiss francs or $501.98 per share valued at about $47 billion and also confirmed to raise a reverse break-up fee offer to $3 billion.

Syngenta rejected a revised offer on August 18 after raising a previous offer to 470 Swiss francs.

Shares of Syngenta AG tumbled 18.2% to 309.90 Swiss francs.

Oshkosh Corporation ((OSK)) advanced 6.6% or $2.53 to $41.07 after the specialty vehicles maker won a contract worth $6.7 billion to build new light tactical vehicles for the U.S. Army.

Qualcomm, Inc ((QCOM)) increased 2.9% or $1.59 to $55.47 after the communications products and services provider agreed to sell the entirety of its UK L-Band spectrum in two separate transactions to Vodafone Group Plc and Hutchison 3G UK Limited for an undisclosed financial terms.

Schlumberger Limited ((SLB)) plunged 4.8% or $3.55 to $68.95 after the oilfield service provider agreed to acquire Cameron International Corporation for about $14.8 billion, a premium of around 56.3% closing price of yesterday.

The shareholders of Cameron will own approximately 10% and will receive $14.44 in the form of cash along with 0.716 shares of Schlumberger’s shares.

The transaction is expected to close in first-quarter ending in March 2016.

Shares of Cameron International Corporation surged 40.8% to $59.78.

European Markets

European markets struggled after volatility perked up in world markets and indexes continue to swing wildly in New York, Europe and Asia.

In London trading, FTSE 100 index slumped 50.83 or 0.8% to 6,030.51 and in Frankfurt the DAX index slid 31.99 or 0.3% to 10,101.38.

In Paris, CAC 40 index fell 21.59 or 0.5% to 4,546.36.

Betfair Group Plc surged 21.8% to 3,170 pence after the online sports betting and gaming company reported revenues in the first-quarter ending in July jumped 15% from a year ago to £135.4 million from £117.3 million.

Separately, the company and the Ireland-based international betting and gaming company Paddy Power Plc signed a merger agreement of £5 billion or $7.85 billion to create an international sports-betting and a gambling group Paddy Power Betfair Plc.

After the merger, Paddy Power shareholders will control 52% of the merged company and receive €80 million or $89.3 million special dividend and shareholders of Betfair will own 48%.

WPP Plc, the communications services provider reported revenues in the first-half ending in June jumped 6.8% from a year ago to £5.84 billion from £5.47 billion.

Net profit in the period surged 51.7% from a year ago to £601 million compared to £396 million and diluted earnings per share increased to 43 pence from 27 pence.

The company said average net debt in the period increased 9% from a year ago to £3.13 billion.

Asian Markets

Nikkei average rebounded after a week of sustained selling following three four days of selling but volatility in Shanghai continued to drive the stock market trading sentiment around the world. The yen gained but crude oil drifted lower to a new six-year low.

Nikkei average in Tokyo jumped following after four days of decline in tentative trading and many investors stayed on the side lines.

The Nikkei 225 Stock Average soared 570.13 or 3.2% to 18,376.83 and the broader Topix index jumped 46.32 or 3.2% to 1,478.97.

The yen strengthened to 119.41 against a dollar.

Nippon Life Insurance Co Ltd intends to acquire 80% stake in smaller rival Mitsui Life Insurance Co for 400 billion yen or $3.34 billion from major stockholders including Sumitomo Mitsui Banking Corp.

Sensex in Mumbai traded down in volatile trading and energy stocks and banks were in focus. Another day of wild swings in Shanghai put Asian markets on alert and casted doubt on Chinese economic strength.

Volatility perked up in Asian markets and Sensex index in Mumbai traded down at close.

Global markets extended losses for the second day after indexes in the U.S. sold off in the last thirty minutes of trading suggesting that the 2% bounce in the day lacked conviction.

Nikkei average in Tokyo, was the lone index in Asia to register positive gain in today’s trading. Indexes in Shanghai swung wildly despite the fifth rate cut in nine months from People’s Bank of China.

Rupee weakened 4 paisa to 66.14 against one U.S. dollar.

The Sensex Index slipped 317.72 or 1.2% to close at 25,714.66. The CNX Nifty decreased 88.85 or 1.1% to 7,791.85.

Indian Oil to build pipeline from Raxaul in Bihar to Amlekhgunj in Nepal, the first trans-nation pipeline between the two neighboring countries.