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Market Update

Global Markets Sell-Off Extends to Day Two, Weekly Losses of 4% Plus


Author: Nichole Harper
ticker.com
Last Update: 1:42 PM ET August 21 2015

1:45 PM New York City, New York – World markets declined from Shanghai to Mumbai to Frankfurt to New York and several market indexes registered losses of more than 4% in the week. Investors have been selling stocks on the stretched valuation in U.S., lack of visible growth in the euro zone and sharpening slowdown in Asia.

In tumultuous trading around the globe, stocks declined, crude oil flirted with a new six-year low and currencies in emerging markets were pushed down to record lows.

After four days of decline of more than 1%, the U.S. market indexes are set to fall more than 5% in the week and register worst weekly decline since 2012.

The worldwide sell-off saw dramatic moves in indexes in Asia and Europe as well. U.K. stocks eased for the eight day in a row, German stock index plunged more than 5% in a week and oil deepened its second sell-off reminding investors of the last decline from $30 to $10 a barrel in five months in 1985.

On Wall Street, Tollbooth Strategy Index declined 228.73 or 2.2% to 10,431.40.

S&P 500 index dropped 40.3 or 2% to 1,996.45 and the Nasdaq Composite Index slumped 105.40 or 2.2% to 4,771.77.

To underscore the extent of market decline in New York, 76 companies in the S&P 500 index have lost at least 20% in the year so far, and in trading today 61 companies registered new 52-week low.

Crude oil in New York declined $1.20 to $40.12 a barrel and gold jumped $4.90 to $1,158.10 an ounce.

U.S. Movers

Hewlett-Packard Company (HPQ) soared 5.4% or $1.47 to $28.83 after the computer peripherals provider reported revenues in the third-quarter ending in July declined 8% to $25.3 billion from a year ago period.

Net income in the quarter declined 10% to $900 million or 47 cents per diluted share compared to $1 billion or 52 cents from the same quarter last year.

HP said revenues in personal systems in the quarter plunged 13% to $7.5 billion and notebook unit sales dropped 3% while desktop unit sales tumbled 20%. Printing division revenue declined 9% to $5.1 billion from a year earlier

Revenues in enterprise division increased 2% to $7 billion but enterprise services revenue plummeted 11% to $5 billion. Software revenue in the quarter slump 6% to $900 million.

HP lowered diluted earnings per share forecast for the year between $1.87 and $1.93 compared to earlier estimated range between $2.03 and $2.23.

Today’s financial report is the last report from HP before it splits itself into two new independently traded companies from November 1, Hewlett Packard Enterprise and HP Inc, a PC and printer company.

Steiner Leisure Ltd (STNR) surged 14.1% or $7.98 to $64.51 after the beauty treatments and spa operator agreed to a leveraged buyout transaction with the private equity firm Catterton Partners for about $843 million.

European Markets

Financial markets in the euro zone accelerated weekly decline and commodities deepened losses in the year.

In London trading, FTSE 100 index dropped 104.49 or 1.6% to 6,263.25 and in Frankfurt the DAX index slipped 108.48 or 1.1% to 10,322.41.

In Paris, CAC 40 index slumped 59.43 or 1.2% to 4,725.02.

For the week, FTSE 100 index declined 4.4% and the DAX index plunged 6% and the CAC 40 index plummeted 4.7%.

GlaxoSmithKline Plc slumped 2.1% to 1,342 pence after the U.K.-based pharmaceutical company agreed to sell its rights to a drug for use in treating auto-immune diseases including multiple sclerosis to Switzerland-based healthcare company Novartis AG for up to £637 million or $1 billion plus royalties.

Novartis will pay the royalties of up to 12% to Glaxo and the transaction is expected to complete by the end of 2015.

Koninklijke Vopak N.V tumbled 15.4% to €38.03 after the Netherlands-based oil and chemical storage and logistic company reported revenues in the first-half ending in June soared 8% to €700.7 million form €647.2 million in a year ago period.

Net profit in the period surged 17% from a year ago to €162.4 million compared to €138.3 million and diluted earnings per share jumped to €1.12 from €0.99.

Asian Markets

Nikkei average in Japan and market indexes in Tokyo dropped following deepening losses in New York and Europe. Commodities also extended losses in the year after crude oil and copper flirted with new six-year lows.

Markets in Tokyo and in Asia accelerated weekly decline following the weak market conditions in Europe and New York.

S&P 500 and Nasdaq indexes dropped more than 1% in overnight trading for the third day in a row on the growing worries that valuation are ahead of economic fundamentals and uncertainty about the rate hike timing.

In addition, euro zone faced another crisis after Greece’s prime minister resigned and paved a path for election as early as in two months.

The Nikkei 225 Stock Average declined 597.69 or 2.9% to 19,435.83 and the broader Topix index plummeted 50.87 or 3.1% to 1,573.01.

For the week, Nikkei 225 plunged 5.3%.

The yen eased to 122.92 against a dollar.

Nitori Holdings Co Ltd slipped 2% to 10,090 yen after the furniture and interior goods seller plans to set up a subsidiary company to manufacture furniture and home furnishings in Ba Ria Vung Tau province in Southern Vietnam with an estimated cost of 2.7 billion yen.

The products will be shipped to Japan, Taiwan and China.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc