Worldwide Sell off Extends to Second Day

Nichole Harper
29 Sep, 2015
New York City

Market indexes in New York and Europe trended lower and commodities were in focus again. Asian markets sold off and Nikkei in Tokyo plunged more than 4%. Reynolds American agreed to sell a business unit for $5 billion.

[R]3:30 PM New York City, New York – Market indexes in New York and Europe trended lower and commodities were in focus again. Asian markets sold off and Nikkei in Tokyo plunged more than 4%. Reynolds American agreed to sell a business unit for $5 billion.[/R]

Stocks on Wall Street continued to drift lower as investors focused on the slowing Chinese economy and rate jitters contributed to the growing worldwide anxieties.

The near melt down in Glencore PLC, the Swiss mining and commodities trading giant, after an analyst report only highlighted the growing anxieties around the world.

On Wall Street, Tollbooth Strategy Index slid 9.21 to 9,983.43.

S&P 500 index rose 4.43 or 0.3% to 1,886.51 and the Nasdaq Composite Index added 6.09 to 4,549.73.

Crude oil in New York gained 85 cents to $45.28 a barrel and gold fell 81 cents to $1,131.14 an ounce.

U.S. Movers

Reynolds American, Inc ((RAI)) increased 21 cents to $43.67 after the tobacco products maker agreed to sell its Natural American Spirit international business to Japan-based Japan Tobacco Inc for about $5 billion or 600 billion yen in cash.

The transaction is expected to be complete by early 2016.

Yahoo! Inc ((YHOO)) soared 4.6% or $1.26 to $28.86 after the internet portal provider said it will proceed with its plans to spin off about $22 billion in Alibaba shares.

Yahoo! said it will go ahead despite a risk of a multi-billion dollar tax bill after the U.S. Internal Revenue Service denied its request to considered tax free deal.

Based on closing price of Monday, Yahoo''s 384 million shares of Alibaba are worth about $22.75 billion.

The company said transaction is expected to complete in the forth-quarter this year.

Yahoo, scheduled to release third-quarter earnings on October 20.

European Markets

In London trading, FTSE 100 index slipped 44.05 or 0.7% to 5,914.52 and in Frankfurt the DAX index decreased 52.67 or 0.6% to 9,432.62.

In Paris, CAC 40 index fell 21.93 or 0.5% to 4,335.12.

Axel Springer SE dropped 2.1% to €51.35 after the Germany-based media company agreed to acquire an 88% stake in the U.S.-based business and financial news website Business Insider for about €306 million or $343 million.

In a conference call, Mathias Dopfner chief executive said it will take a break from major acquisitions after the deal with Business Insider.

Wolseley Plc tumbled 13% to 3,636 pence after the building materials distributor reported revenues in the year ending in July soared 11.3% from a year ago to £13.30 billion.

Profit in the year tumbled 57.7% from a year ago to £213 million compared to £504 million and diluted earnings per share dropped to 123.4 pence from 180.5 pence.

Wolseley plans to buy back shares for as much as £300 million or $455.1 million and said loss on closure of businesses including the impairment of assets from branch closures in the Nordic region.

The company estimated impairment and exceptional items in the year of about £242 million of which £234 million charge is related to the operations in the Nordic region.

Asian Markets

Nikkei average plunged 4% and led the Asia-wide decline on the ongoing Chinese economy slowdown worries. Shipping companies plunged more than 5% after a mid-tier shipper announced a plan to file bankruptcy.

Market indexes in Asia plunged after Japanese stocks sold off on the ongoing worries in China and a mid-tier shipping prepared to file a bankruptcy protection.

Shipping companies and steel makers led the decliners after a second day sell-off after Chinese industrial companies reported 8.8% decline in earnings.

The Nikkei 225 Stock Average plunged 714.27 or 4.1% to 16,930.84 and the broader Topix index slumped 63.15 or 4.4% to 1,375.52.

The yen strengthened to 119.42 against a dollar.

Japan Tobacco Inc slumped 3.9% to 3,961 yen after the tobacco products maker agreed to acquire certain brand rights from the U.S.-based Reynolds American Inc for about 600 billion yen or $5 billion in cash.

Daiichi Chuo Kisen Kaisha after the trading halt for the day at 28 yen after the shipping transportation services provider said going to filed for bankruptcy protection.

Mitsui OSK Lines Ltd stock tumbled 7.4% to 288 yen as Mitsui is the major investor of Daiichi Chuo and estimated to book a special loss in an earning report due on October 30 of about 25 billion yen or $209.4 million.

Market indexes in Mumbai traded higher after the Reserve Bank of India lowered its reference rate as expected today.

The central bank’s action was widely anticipated by market and economy watchers with the deepening deflation in wholesale prices and struggling exports.

However, consumer price inflation in India still remain elevated at 5% to 7%, nearly three times higher than the inflation rate in the developed economies and China.

Reserve Bank of India lowered its repo rate by 50 basis points to 6.75% and left its cash reserve ratio requirement unchanged at 4%.

The housing finance companies stocks rallied after the central bank move.

LIC Housing Finance Ltd advanced 2.2%, GIC Housing Finance Ltd soared 3.2%, Gruh Finance Ltd increased 1.3% and Can Fin Homes Ltd jumped 3%.

Housing Development Finance Corp. Ltd gained 2.7%.

Rupee strengthen 8 paisa to 65.96 against one U.S. dollar.

The Sensex Index increased 161.82 or 0.6% to close at 25,778.66. The CNX Nifty gained 47.60 or 0.6% to 7,843.30.