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Market Update

Jittery Stocks on Wall Street Extend Losses on Third Day

Author: Nichole Harper
Last Update: 11:06 AM ET June 21 2013

10:50 AM New York – U.S. market indexes are set to decline for the third day in a row after the Fed laid out its stimulus exit plan that has been in place for more than four years. The Fed’s orchestration of a carefully designed plan to wean-off the economy from cheap money supply has raised global jitters.

U.S. stocks opened higher after dropping more than 4% in a two-day sell-off but failed to hold on the early morning advance.

Market sentiment is fragile after the worst two-day drop in 19 months caused by the growing anxieties linked to the Federal Reserve time table for the unwinding of its stimulus plan.

The S&P 500 index declined 0.16 to 1,587.02 and the Nasdaq Composite Index dropped 0.5% or 16.10 to 3,348.46.

Market has yet not come to terms with the Fed exit plan which has been in place for five years. Investors have come to expect cheap money supply from the Fed, though the Fed has said from the start it will begin the unwinding of the record $4 trillion of monetary easing once the economy regains its footing.

European Markets

Market indexes in Europe traded mixed and the FTSE 100 index in London gained 0.2%.

The DAX index in Frankfurt declined 0.4% and in Paris was nearly unchanged.

Russia based Rosneft agreed to double its oil supply to China. According to the company, the energy supplier has agreed to increase its daily supply to China to 300,000 barrels starting in 2015 for the next 25 years in a deal worth $270 billion.

The U.K. government budget deficit narrowed in May after government cut spending and received one-time payment of 3.2 billion pounds from the tax evasion deal with Switzerland.

The deficit in the first two months of fiscal year to May declined to 21.4 billion pounds from 24.3 billion pounds in the year ago period, according to the Office for National Statistics.

The figures do not include the payment of interests to the Bank of England and one-time transfer of 28 billion pounds linked to pension assets of Royal Mail Group Ltd.

Asian Markets

Asian markets rebounded on the last day of a tumultuous week that shook world markets after the U.S. Federal Reserve laid out a timetable to unwind record stimulus.

Market indexes in Japan jumped 1.7% and gained 4.3% in the week after four weeks of selling and indexes in Hong Kong declined 0.6%.

Market indexes in Malaysia, South Korea and in Thailand extended losses and in Jakarta plunged more than 3% for the second day in a row.

In Shanghai, interbank lending rate dropped sharply to 8.1% after it surged to 13.44% on Thursday. The overnight lending rate only a month ago was at 4%.

The seven-day repo rate declined to 5.5% after it surged as high as 25% in Thursday’s trading after banks began lending and in an apparent shift in central bank stance in providing additional liquidity. The People’s Bank of China did not issue any public directive.

Rupee in India declined and flirted near its record low of 60 against a dollar as exporters withheld the payments after the currency plunged more than 9% in less than three weeks of trading.

The government began a crackdown and halted the sale of gold through financial companies and state controlled bank. Import of gold is the single largest contributor to the trade deficit.

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