STOCK EXCHANGES in Dublin and London may have been closed yesterday but markets were struggling to recover some of the ground lost on Friday in the wake of disappointing US data.
The euro rallied against the dollar and the yen as investors bet European authorities can keep the euro zone intact, though concerns over Spain’s ailing banking sector and global growth continued to cap gains.
EUROPE
EUROPEAN STOCKS declined for a fourth day as reports showed that orders to US factories unexpectedly fell in April and China’s services-industry growth weakened in May.
Volkswagen and Daimler dropped at least 1.5 per cent, as carmakers led losses in the Stoxx Europe 600 Index.
Aker Solutions, the Norwegian oil-services company, slumped to the lowest in four months. Vestas Wind Systems plunged to a nine-year low after BlackRock cut its holding in the company to 4.02 percent.
The Stoxx 600 retreated 0.5 per cent to 233.87 at the close in London. The volume of shares changing hands on the companies listed on the gauge was 55 per cent lower than the average of the last 30 days, as the UK, Irish and Greek markets were closed.
The Euro Stoxx 50 has lost 20 per cent from its high this year, which some analysts call a bear market. The Stoxx 600 has tumbled 14 per cent from its 2012 high amid concern Greece will be forced to leave the euro currency union. The gauge is now trading at 9.72 times its estimated earnings, lower than the five-year average of 11.67, according to data compiled by Bloomberg.
National benchmark indexes dropped in nine of the 15 western European markets that were open today. Germany’s DAX fell 1.2 percent, while France’s CAC 40 added 0.1 per cent. Spain’s IBEX 35 jumped 2.9 per cent, while Italy’s FTSE MIB rose 1.2 per cent.
ASIA
HONG KONG shares tumbled 2 per cent to their lowest close for the year yesterday as the weak US data added to worries about Europe’s deepening debt crisis and China’s slowing economy, driving investors out of riskier assets.
All major Asian stock markets slumped as global investors continued to flee from equities, which until the end of the first quarter this year had been among the best performing asset classes.
The latest wave of selling was sparked by surprisingly weak US job data on Friday, which followed disappointing manufacturing data from China and from Europe.
The outlook on China was further soured by an official survey of services activity released on Sunday, which showed the sector’s rate of growth slowed for the second straight month in May.
The Hang Seng index ended down 2 per cent and turned negative on the year, while the China Enterprises index of top locally listed mainland firms fell 2.6 per cent.
On the mainland, the Shanghai Composite slid 2.7 per cent, while the large-cap focused CSI300 shed 2.8 per cent.
The worst-hit sectors in Hong Kong remained cyclicals such as materials, mining and energy that are closely linked to economic growth. Sub-indices for the materials and energy sectors fell 3 and 2.5 per cent, respectively.
Steel firm Maanshan Iron Steel dropped 7 per cent while larger peer Angang Steel fell 5 per cent, both extending their May rout.
Oil major CNOOC dropped 2.6 per cent while China’s largest coal producer China Shenhua dropped 4.2 per cent.
The biggest drag on the Hang Seng, however, was HSBC Holdings, which fell 1.2 per cent to a four and a half month closing low. Shares of Europe’s largest bank, which commands a 15 per cent weighting on the Hong Kong benchmark, have slumped more than 16 per cent from a February 21st high as the euro zone debt crisis worsened.
In Japan, Sony, which gets about a fifth of its sales in the US, fell to levels not seen since 1980, when the Walkman was introduced in the US.
Sands China which had its first trading day as a part of the Hang Seng Index, fell 4.8 per cent after Deutsche Bank cut its target prices of Macau gaming stocks by 6 to 13 per cent, partly on slowing growth in the gambling enclave.
NEW YORK
US STOCKS fell modestly as investors reacted to the latest signs of economic slowdown and looked ahead to events this week that could help ease Europe’s debt crisis
US banking stocks are heading into a bear market as Europe’s debt crisis pressures the sector. The KBW Bank index, which measures the performance of 24 US banks, is down more than 17 per cent from its intraday high in March. The index was down 2.1 per cent by noon.
The Dow Jones industrial average dropped 38.07 points, or 0.31 percent, to 12,080.50. The Standard Poor’s 500 Index dropped 6.24 points, or 0.49 percent, to 1,271.80.
The Nasdaq Composite Index dropped 11.07 points, or 0.40 percent, to 2,736.41. – (Reuters/ Bloomberg)
