Stocks: Wednesday's review
Asian markets closed Wednesday mixed.
Impasse of U.S. debt ceiling put pressure on stock markets in Tokyo, Hong Kong and Sydney
Stock equities was also under pressure as the Reserve Bank of Australia reported about better-than-expected rise of consumer inflation in the second quarter, focusing the market’s attention back on the interest rates.
On Wednesday the statistics showed that Q2 consumer prices rose by 0.9% in Australia, beating average forecast of increase by only 0.7%. Annually the prices gained by 3.6% against forecasted rise of 3.4%. Reserve Bank of Australia Governor Glenn Stevens said this week that inflation data will help determine a further direction of monetary policy.
As the yen strengthened against the U.S. dollar to the highest levels, Japanese exporters moved lower: Nintendo Co. lost 2%, Honda Motor Co. gave up 1.7%, and Toyota Motor Co. fell 1.2%.
Nissan Motor Co fell 1.9% ahead of its after-market earnings announcement.
Many Hong Kong-listed exporters suffer losses amid concern about how the U.S. debt situation: apparel group Esprit Holdings Ltd. lost 2.6%, Li & Fung Ltd. fell 1.5%, computer maker Lenovo Group Ltd. gave up 0.8%, and ports operator Cosco Pacific Ltd. ended 2.6% lower.
As for gainers, banking sector was among winners: Henderson Land Development Co. went up 1.1%, China Resources Land Ltd. rose by 1.5%, and
European stock markets fell sharply Wednesday, pressured by poorly received earnings reports, a broker downgrade of the banking sector and concerns over the status of U.S. debt-ceiling negotiations.
On Wednesday UK released its CBI industrial order books balance, which missed analysts’ estimates. CPI preliminary from Germany also didn’t support the markets.
The pan-European Stoxx 600 index appeared under pressure by data, which showed U.S. durable-goods orders dropped in June.
Swiss chemical group Clariant AG stood out as the biggest decliner in the Stoxx 600, plunging more than 14% in Zurich as its second-quarter net profit fell short of expectations.
Another big loser, shares of telecom-equipment firm Alcatel-Lucent slumped almost 7% in Paris after a disappointing earnings report and outlook disclosed by peer Juniper Networks Inc. (-0.1%) late Tuesday.
In France shares of automakers declined: Peugeot sank 7.6% as its reported of rising costs, Renault SA went down 3.2% and Michelin SA shed 2.2%.
Also on the earnings front, shares of ArcelorMittal rose by 0.8% due to positive quarterly report.
U.S. stocks plummeted down on average by 2% as ongoing worries over the U.S. debt ceiling weighed on investor sentiment and amid weak US statistics.
Senate Majority Leader Harry Reid aggravated the decline as hr said that it’s time Republicans “face facts” and agree on a compromise plan. But prolonged standoff in Washington over hiking the U.S. debt ceiling continued.
Economy: According to the statistics, the durable goods orders declined by 2.1% in July, while analysts expected the drop by 0.3% after rising of 2.1% in May. The durable goods orders excluding transportation climbed by 0.1%, except defense sang by 1.8%.
Beige book prepared for the Aug 9 FOMC says "economic activity continued to grow; however, the pace has moderated in many Districts." Six nearest Eastern seaboard dists reported a slowdown; Atlanta and Richmond were unch; 4 Dists continued to grow modestly. (Prior book had 4 slower, 7 steady, 1 faster).
Dow industrials component Boeing (BA, Fortune 500) reported earnings per share that blew away expectations while it raised its outlook for the rest of the year. The shares rose less than by 1%.
Shares of Caterpillar (CAT), Competitors Deere (DE, Fortune 500) and Cummins (CMI, Fortune 500) lost 3%.
One sign of the increasing worries among investors is the VIX (VIX), also known as Wall Street's "fear gauge," which jumped by more than 13% on Wednesday alone.
Amazon (AMZN, Fortune 500) shares rose 4% after the company reported its profits fell to $191 million last quarter, or 41 cents a share. Despite the profit drop, the online retailer's results surpassed forecasts.