U.S. Stocks Lack Direction on Rate Jitters, India Accelerates Energy Deals

Nichole Harper
31 Aug, 2015
New York City

U.S. rate jitters dominated market sentiment in New York and in Europe. Crude oil halted the largest two-day advance and volatile Chinese stocks dropped as much as 4% before closing up. India stepped up investment in energy production with agreements in Mozambique and Iran.

[R]1:00 PM New York City, New York – U.S. rate jitters dominated market sentiment in New York and in Europe. Crude oil halted the largest two-day advance and volatile Chinese stocks dropped as much as 4% before closing up. India stepped up investment in energy production with agreements in Mozambique and Iran.[/R]

Stocks on Wall Street and in Europe lacked direction as the U.S. rate jitters resurfaced, oil halted 2-day rally and Chinese stocks ended volatile session higher.

U.S. rate jitters dominated trading in New York and investors speculated on the next Fed move and the U.S. 10-year treasury notes rose to yield 2.153%.

In New York trading, crude oil future for the immediate month delivery declined 85 cents to $44.36 and Brent crude in London traded down $1.07 to $48.98 a barrel.

Chinese stocks continued volatility and stocks in Shanghai fell as much as 4% but closed up 0.7%.

On Wall Street, Tollbooth Strategy Index slipped 53.48 or 0.5% to 10,411.96.

S&P 500 index fell 6.28 or 0.3% to 1,982.59 and the Nasdaq Composite Index slid 9.91 or 0.2% to 4,818.33.

Crude oil in New York jumped $2.59 to $47.81 a barrel and gold edged down 0.10 cents to $1,133.90 an ounce.

U.S. Movers

Bristol-Myers Squibb Company ((BMY)) slipped 1.4% or 87 cents to $59.74 after the drug-maker said it plans to acquire exclusive worldwide right for mid-stage fibrosis drug from privately held Promedior Inc for up to $1.25 billion in cash.

HealthSouth Corp ((HLS)) rose 7 cents to $43.42 after the rehabilitative care provider plans to acquire privately held home-healthcare company CareSouth Health System Inc. for $170 million in cash.

Quanex Building Products Corporation ((NX)) edged up 1 cent to $18.25 after the residential building products supplier agreed to acquire privately held Woodcraft Industries, a premier supplier of doors and components for about $248.5 million in cash.

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

European Markets

In a preliminary estimate, the annual inflation in the euro area was stable at 0.2% in August compared to July, the Statistical Office of the European Communities said.

Market indexes in Europe opened higher and extended gains and commodities traded higher.

In Frankfurt, the DAX index slid 17.09 or 0.2% to 10,298.53 and in Paris CAC 40 index slipped 28.18 or 0.6% to 4,646.95.

For the month, DAX index tumbled 9.5% and for the three month to August plunged 10.3%. Year-to-date, the index increased 4.6%.

For the month CAC 40 index plunged 8.6% and for the three months to August declined 7.2%. In the last six months, CAC 40 plummeted 5.5% but the index jumped 8.9% in the year so far.

AP Moeller Maersk A/S fell 0.2% to 11,070 kronor after the Denmark-based shipping and oil producer received an approval to develop the Culzean gas field worth about $4.5 billion, the largest new operation in the North Sea, U.K.

The gas production is expected to start from 2019 and continue for at least 13-years with estimated daily production equivalent between 60,000 barrels and 90,000 barrels.

The field is expected to be large enough to provide approximately 5% of U.K.’s natural gas demand in 2021.

Volkswagen AG slipped 1.6% to €168.85 after the Germany-based auto maker was ordered by international arbitration tribunal to sell its 19.9% stake worth about $3.8 billion or 463 billion yen in Japan-based Suzuki Motor Corp.

Two auto makers entered a collaboration agreement in 2009 to develop a diesel engine. The latest decision from the London, U.K. based tribunal will finally terminate the arrangement between the companies that had failed to live up to expectations.

The arbitration proceeding was initiated in 2011 by Suzuki after the Japanese auto maker claimed the breach of contract by Volkswagen.

Asian Markets

Nikkei average in Tokyo closed down following weak economic data. Industrial production in July declined unexpectedly by 0.6% and housing starts in the month plunged 7.4%. Auto production in the month decreased 5.9%.

Market indexes in Tokyo declined after industrial production fell unexpectedly in July, automobile production fell and housing starts annual pace plunged.

Industrial production in July unexpectedly dropped 0.6% followed by 1.1% increase in June, the Ministry of Economy, Trade and Industry reported.

The ministry said based on surveys, output in August is estimated to increase 2.8% from July but growth is expected to decrease to 1.7% in September.

Housing starts in July plunged 7.4% compared to 16.3% jump in the previous month and the annual starts rate dropped to 914,000 from 1.03 million a month ago, the Ministry of Land, Infrastructure, Transport and Tourism said.

Automobile production in July declined 5.9% to 841,812 units from 894,846 units in a year ago month, the Japan Automobile Manufacturers Association said today.

The association said domestic sales in July plunged 7.6% to 425,093 units compared to a year ago month but export to the United States soared 13.2% while export to rest of Asia declined 10.6%.

Motorcycle production tumbled 18.3% to 40,795 units and sales in domestic market dropped 2.8% while exports plummeted 23.4%.

The Nikkei 225 Stock Average slumped 245.84 or 1.3% to 18,890.48 and the broader Topix index decreased 12.75 to 1,537.05.

For the month, Nikkei 225 plunged 8.3% and for the three-months to August, Nikkei 225 declined 8.2% but for the year, surged 22.5%.

The yen strengthened to 121.20 against a dollar.

Stocks in Mumbai were under pressure after the first-quarter economic growth declined from the previous quarter on lower government spending.

July quarter economic growth declined to 7% from the March quarter growth of 7%, largely on the weak growth in the government spending.

Economic growth in the quarter a year ago was 6.7%.

Rupee weakened 33 paisa to 66.47 against one U.S. dollar.

The Sensex Index decreased 109.29 or 0.4% to close at 26,283.09. The CNX Nifty fell 30.65 or 0.4% to 7,971.30.

For the month, Sensex Index plunged 6.3% and for the three months to August declined 5.5%. In the last six months, Sensex Index tumbled 11.1% and in the year so far fell 4.4%.

For the month, CNX Nifty tumbled 6.6% and in the three months to August dropped 5.5%. For the six months, CNX Nifty plunged 11.4% and in the year so far declined 3.8%.

ONGC, the government controlled and the largest oil and gas explorer in India plans to invest $24 billion in Mozambique to produce natural gas.

Indian Oil, the government controlled oil refiner and distributor plans to build a $3 billion petrochemicals plant in Iran.