Another Day of Sell-off in Global Stocks Sparked by Weakening Commodities

Nichole Harper
08 Dec, 2015
New York City

With weak sentiment, S&P 500 index opened lower and struggled to rebound in the positive zone after a sell-off in Asia and in Europe. Crude oil price extended losses and two largest mining companies announced additional cuts in capital spending.

[R]12:00 PM New York City, New York – With weak sentiment, S&P 500 index opened lower and struggled to rebound in the positive zone after a sell-off in Asia and in Europe. Crude oil price extended losses and two largest mining companies announced additional cuts in capital spending.[/R]

S&P 500 index opened lower and failed to cross positive line after two hours of trading and turned lower again after crude oil price remained weak.

Market sentiment was weak after a sell-off in Asia and in Europe and investors turned cautious after crude oil futures declined more and immediate month deliver price also dropped to a new seven-year low.

On Wall Street, Tollbooth Strategy Index slipped 56.68 or 0.5% to 10,952.11.

S&P 500 index slipped 12.11 or 0.6% to 2,065.18 and the Nasdaq Composite Index slid 14.34 or 0.3% to 5,086.67.

Crude oil in New York decreased 37 cents to $37.34 a barrel and gold added $4.02 to $1,075.36 an ounce.

U.S. Movers

AutoZone, Inc ((AZO)) fell $1.08 to $752.50 after the automobile parts and accessories retailer said revenues in the first-quarter ending on November 21 jumped 5.6% from a year ago to $2.4 billion.

Same store sales in the quarter advanced 3.5%.

Net income in the quarter soared 8.3% to $258.1 million or $8.29 per diluted share compared to $238.3 million or $7.27 per share from the same quarter last year.

Toll Brothers Inc ((TOL)) dropped 3.1% or $1.18 to $36.34 after the luxury residential home developer said revenues in the fourth-quarter ending in October rose 6.6% from a year ago to $4.17 billion.

Net income in the quarter surged 6.8% to $363 million or $1.97 per diluted share compared to $340 million or $1.84 per share from the same quarter last year.

European Markets

European stock markets continued to slide on Tuesday as oil prices reached seven-year lows, while resource companies fell on concerns about demand from China.

Total production output in October jumped 1.7% from a year ago month and rose 0.1% from September.

Output in mining and quarrying soared 8.5% and Manufacturing output fell 0.1% and electricity output jumped 3.6% from a year ago month, Office of the National Statistics said.

The seasonally adjusted revised estimate of gross domestic product in the third-quarter increased 0.3% in the euro zone and 0.4% in the wider region of EU28. Compared to year ago period, gross domestic product jumped 1.6% in the euro zone and 1.9% in the wider region of EU28, the Statistical Office of the European Communities reported.

China''s exports fell 6.8% in November from a year earlier, China''s General Administration of Customs reported. The results indicate the fifth consecutive monthly decline due to weaker global demand.

With better-than-expected imports, China’s trade surplus narrowed down to $54.1 billion in November from $61.6 billion in October.

Oil and gas shares declined after the robust supply, decided on the recent OPEC meeting, sent oil prices near seven-year lows below $40 a barrel in New York and below $42 a barrel in London.

In London trading, FTSE 100 index dropped 72.72 or 1.2% to 6,150.94 and in Frankfurt the DAX index slumped 162.82 or 1.5% to 10,721.49.

In Paris, CAC 40 index declined 63.03 or 1.3% to 4,693.38.

Air France KLM SA was little changed at €6.42 despite the news that the Paris attacks led to a €50 million drop in November revenues on the air traffic decline.

The airline also said it remained on track to meet 2015 targets because current booking trends were in-line with a progressive recovery.

Asian Markets

The Nikkei 225 average declined as falling oil and commodity prices pulled mining and energy shares lower, despite the GDP was revised to expansion from the previous estimate of contraction.

Crude oil prices tumbled after the Organization of Petroleum Exporting Countries decided not to decrease output at least until June 2016 at the latest meeting on Friday.

Energy explorer Inpex, oil refiner JX Holdings, and energy services firm JGC saw the largest declines.

On the positive side, Japan’s gross domestic product expanded at an annual rate of 1% in the third quarter, compared with a preliminary estimate of 0.8% decline, according to the Cabinet office release.

The current account surplus in October widened 72% to 1.46 trillion yen from a year ago, the Ministry of Finance reported.

Exports in October declined 3.7% while imports plunged 16.4%.

Overall, bank lending in November jumped 2.3% to 492.60 trillion yen from a year ago, the Bank of Japan said.

Toshiba is likely to pay a record fine of 7.37 billion yen for accounting fraud, following the recommendation of the Securities and Exchange Surveillance Commission.

The Nikkei 225 Stock Average declined 205.55 or 1% to 19,492.60 and the broader Topix index slumped 16.48 to 1,568.73.

The yen strengthened against the dollar, up 0.2% to 123.12.

Sensex in Mumbai trading declined to a three-month low after on the weakness in commodities and energy prices.

Stocks were under pressure on Dalal Street after crude oil price in London and New York declined to a seven-year low.

The decision by the OPEC member nations at the latest meeting on Friday decided not to cut production quota only contributed to the market jitters as the supply of oil in the U.S. continues to rise and add to the market glut.

In New York, the price of oil for immediate month delivery declined to a seven-year low below $40 a barrel and in London, U.K. the Brent crude oil declined below $42 a barrel.

Also, price for delivery of oil in 2026 also declined for the first time below $60 a barrel, indicating long term bearishness in the market.

Hindalco Industries Ltd dropped 3.7%, Steel Authority of India Ltd declined 3.4%, Vedanta Ltd slipped 3.3%, Coal India Ltd decreased 2.2%, Tata Steel Ltd fell 2.1%, and Hindustan Zinc Ltd decreased 2%.

Rupee weakened 11 paisa to 66.83 against one U.S. dollar.

The Sensex Index fell 219.78 or 0.9% to close at 25,310.33. The CNX Nifty decreased 63.70 or 0.8% to 7,701.70.

Tata Motors controlled Jaguar Land Rover retail sales in November surged 27%. Religare sold its stake in life insurance joint venture to Bennett, Coleman.