Stocks: Monday's review
Japan’s Nikkei 225 (NKY) Stock Average declined the most in six weeks as makers of construction equipment declined after Nomura Holdings Inc. said demand in China will cool and Fitch Ratings cut Greece’s credit rating.
Construction-machinery makers dropped after Nomura cut its estimate for equipment sales in China by 20 percent for the year ending March 2012, citing measures by authorities to rein in inflation. In addition to raising interest rates, The People’s Bank of China has lifted reserve requirement ratios for major banks eight times since mid-November to curb lending in an economy where price gains exceed a government target of 4 percent.
Komatsu plunged 5.9 percent to 2,381 yen and was the most- actively traded stock in Japan. Hitachi Construction Machinery Co. declined 6 percent to 1,676 yen. Kobe Steel Ltd. (5406) dropped 3.8 percent to 176 yen. Kawasaki Heavy Industries Ltd. (7012) lost 4.9 percent to 291 yen.
Canon Inc. (7751), a camera maker that gets more than 30 percent of its sales in Europe, lost 1 percent.
Tokyo Electric Power Co. slumped 9 percent after the utility reported the biggest loss among the country’s nonfinancial companies. The company reported a full-year net loss of 1.25 trillion yen ($15.3 billion) following the accident at its Fukushima Dai-Ichi nuclear power plant.
Fanuc Corp. (6954), an industrial-robot maker that gets about half of its sales from China, lost 4.1 percent to 12,300 yen and was the heaviest drag on the Nikkei.
European stocks dropped to a one- month low after Spain’s ruling party suffered its worst election defeat in 30 years and Standard & Poor’s warned it may downgrade Italy’s debt.
Banco Santander SA (SAN), Spain’s largest bank, and Italy’s Intesa Sanpaolo SpA (ISP) led a selloff in financial shares, both falling more than 1.5 percent.
Credit Agricole SA (ACA) sank 3 percent to 10.53 euros after S&P downgraded the counterparty credit rating for France’s third- largest lender to A+/A-1 from AA-/A-1+, saying the bank has a “significant sensitivity” to Greece’s creditworthiness and economic prospects.
Commerzbank lost 5.3 percent to 3.74 euros in Frankfurt after announcing plans to raise capital by selling new shares to help repay state aid. Germany’s second-biggest bank will sell 2.44 billion new shares at 2.18 euros apiece. Shareholders will be allowed to subscribe to 10 new shares for every 11 already held from May 24 to June 6, the company said.
Ryanair retreated 5.3 percent to 3.36 euros as Europe’s biggest discount airline said it will cut capacity for the first time in its history next winter as higher fuel costs threaten to render swathes of the network unprofitable.
The airline said annual profit will be “similar” to last year’s amid slower growth in demand. The airline still reported a 26 percent jump in full-year adjusted profit after taxes to 401 million euros.
Air France-KLM (AF) Group slumped 4.5 percent to 11.46 euros in Paris trading, while EasyJet Plc lost 4.9 percent to 345.1 pence. Lufthansa, Europe’s biggest airline by sales, sank 3.5 percent to 15.03 euros.
Anglo American Plc (AAL) and Royal Dutch Shell Plc (RDSA) led a selloff in commodity producers as base metals fell in London and crude oil tumbled in New York. Anglo American declined 4.1 percent to 2,830.5 pence, Antofagasta Plc (ANTO) lost 3.9 percent to 1,160 pence and Shell dropped 2.3 percent to 2,095 pence.
U.S. stocks closed sharply lower Monday as simmering worries about Europe's debt problems boiled over, sending investors in search of safety.
The selling was broad-based, with all 30 Dow components in the red. Caterpillar (CAT, Fortune 500), Alcoa (AA, Fortune 500) and Du Pont (DD, Fortune 500) were the biggest laggards on the blue-chip index.
Financial stocks also faltered, with shares of Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Wells Fargo (WFC, Fortune 500), Citigroup (C, Fortune 500) and Goldman Sachs (GS, Fortune 500) all down more than 1%.
Companies: Shares of entertainment products maker Sony (SNE) slipped nearly 4%. The company posted a $3.19 billion annual loss and cut its full-year earnings outlook to reflect damages of the earthquake and tsunami in Japan.
Shares of Krispy Kreme (KKD) jumped more than 20% after the doughnut maker beat earnings per share by 4 cents on strong sales.
Commodities: Oil for July delivery fell $2.40 to settle at $97.70 a barrel.
Gold futures for June delivery rose $6.50 to $1,515.40 an ounce.