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10-Years 2.61% -0.14
Oil -0.58 (-0.62%) 93.19
Gold +19 (+1.16%) 1,664
The markets fell after Monday’ weak macroeconomic data from the U.S. According to the Institute for Supply Management (ISM), US manufacturing index of business activity dropped to 50.9 in July, down from 55.3 in June.
Purchasing managers index data from Brazil and the U.K. also showed a contraction in July manufacturing activity.
Average forecast was a reduction to 53.0 points.
Japanese exporters strained under the weight of a strengthened yen, which fueled speculation that Tokyo might intervene to curb the currency’s rise. Today Japanese Finance Minister Yoshihiko Noda said the nation’s currency is overvalued and he’s watching markets closely.
As a result, shares of Japanese export-aimed companies dropped: Nikon Corp. -2.85%, Komatsu Ltd. -1.88%, Nintendo Co. -2.78%.
Loss-based banks in China have put pressure on the indices of Hong Kong and Shanghai. In Hong Kong, shares of Industrial & Commercial Bank of China Ltd. -3.67% lost after reports that Goldman Sachs sold 638 million shares in Hong Kong.
Shares of HSBC Holdings PLC rose 1.23% in Hong Kong after the quarterly report exceeded expectations and disclosure of plans to reduce 30 thousand workers in 2013.
Against the background of falling oil futures declined yesterday that because of fears of slowing U.S. economy, also suffered the loss of the energy sector: the Hong Kong stock Cnooc Ltd. decreased by 1.02%, Aluminum Corp. of China Ltd., or Chalco dropped by 2.67%. In Sydney, shares of Chalco lost 1.44%.
Meanwhile, a decline for Chinese banks weighed on stocks in Hong Kong as well as Shanghai.
Mainland China-based banks were mostly lower in Hong Kong. Shares of Industrial & Commercial Bank of China Ltd. dropped by 3.7% following media reports that Goldman Sachs International had sold 638 million Hong Kong-listed shares of the Chinese lender for a client.
Shares of HSBC Holdings PLC climbed by 1.2% in Hong Kong and provided support to the broader market a day after the company reported better-than-expected first-half results and announced a plan to cut 30,000 jobs by 2013.
Several resource-sector stocks also fell in the region after commodity prices declined in U.S. trading. Shares of energy major Cnooc Ltd. dropped 1%, and Aluminum Corp. of China Ltd., or Chalco, gave up 2.7% in Hong Kong. Chalco’s shares also lost 1.4% in Shanghai trading.
European stock exchanges plunged to a 10-month low.
European stocks shed amid concern that a slowdown in the world’s largest economy may derail global growth. Surged bond yields in Italy reawakened concern that the region’s debt crisis will worsen amid slowing global growth. Italy’s 10-year yield jumped to the most since 1997.
Market participants also concerned that the crafted agreement between Barack Obama and congressional leaders to raise the federal debt ceiling and spending reduction may lead to slowdown in economic recovery. Yesterday they approved legislation to hike the U.S. debt limit by at least $2.1 trillion and cut federal spending by $2.4 trillion.
The Switzerland’s SMI index (SMIC) tumbled 4.1% as the euro and the US dollar dropped to a record low against the franc: Swiss Re AG (SREN) -5.44%, ABB Ltd. - 4.64%, Nestle SA - 1.29%
In Italy Fiat Industrial SpA’ shares fell by 8.43% and Parmalat SpA IT: PLT decreased by 2.70%.
In London banking sector was the worst performer : shares of Rio Tinto PLC fell by 1.91%, shares of BHP Billiton PLC went down by 1.93%.
US stocks eased 2%-3% on Tuesday.
The markets plummeted down amid concern that the agreement between Barack Obama and congressional leaders on federal debt ceiling and spending reduction may lead to slowdown in economic recovery. On Tuesday the Senate and President Obama approved approved the legislation plan to hike the U.S. debt limit by at least $2.1 trillion and cut federal spending by $2.4 trillion.
IMF' chief Lagarde said that “By reducing a major uncertainty in the markets and bolstering U.S. fiscal credibility, this agreement is good for both the U.S. and the global economy.” Then he added “Raising the debt ceiling means a severe economic disruption has been avoided, and the accompanying deficit reduction deal is an important step toward fiscal consolidation.”
Economy: June US personal income coincided with the forecast of 0.1% compared with previous growth of 0.2%. June US personal spending fell by 0.1%, the first decline in the last 2 years. Analysts expected the figure remain unchanged (0.0%) after its rising by 0.1% in May.
Corporate news: Shares of NYSE Euronext (NYX) plunged 5% as the stock exchange operator posted a 19% drop in second-quarter profit, due in part to costs associated with its Deutsche Boerse merger.
General Motors (GM) reported July U.S. sales added 7.6% to 214,915 vehicles vs. expected +7%. On Tuesday shares of General Motors added 3.6%
Ford Motor (F) reported July U.S. sales advanced by 9% to 180,865 vehicles vs. expected +7.6%. On Tuesday shares of Ford Motor advanced by 4.1%.
Shares of MetroPCS Communications (CPS), the largest retailer in Germany, plunged 36.6% as the company’s Q2 profit rose at 306 million euros compared with 334 million euros a year earlier. Its Media-Saturn household electronics unit suffered in the first quarter the first loss in 20 years. EPS $0.24 vs. est. $0.29.
Shares of SM Energy Company (SM) went up by 9.5% as the company reported a massive 2Q beat on strong volumes/lower costs, upped 2011 guidance and established a big 2012 volume target. EPS $0.91 vs. est. $0.55. Production for 2012 expected to increase by 35%-40%.
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