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Market Update

Stocks on Wall Street Struggle, Brazil Index Plunges 4.6%


Author: Nichole Harper
ticker.com
Last Update: 11:53 AM ET October 27 2014

11:50 AM New York – Stocks on Wall Street eased following largest weekly gain in 22 months. Oil continued to slide as investors speculated global supply is rising faster than the demand. German business confidence dropped for the sixth month in a row.

Stocks on Wall Street trimmed last week’s gains and oil price decline extended to the eighth week in a row.

Market indexes on Wall Street rallied the most last week since January 2013 and resource sector linked stocks led the decliners today.

In overseas markets, Brazil benchmark index plunged nearly 5% after the re-election of President Dilma Rousseff. Investors sold stocks on the worries that economic growth will be sluggish and reforms will lag under the leadership of Rousseff.

On Wall Street, S&P 500 index declined 11.9 or 0.6% to 1,953 and the Nasdaq Composite Index eased 0.3% or 13.81 to 4,469.98.

European Markets

European markets extended gains after most banks in the euro zone met the requirements laid out in the stress test by the European Central Bank. The bank added 25 out of 130 banks failed this year’s stress test.

The central bank’s report focused on the undercapitalization at banks under certain economic scenarios and the ECB said most problems are at the smaller and medium-size banks.

The banks were required to have at least 5.5% of highest quality of capital to risk-adjusted assets. And, the ECB said 16 banks have raised capital since the cut-off date of December 2013 balance sheet data and other nine banks have nine months to raise additional capital and meet requirements.

The total shortfall at the failed banks was €24.6 billion but the deficit falls to €9.5 billion after accounting for capital raised this year.

Banca Monte dei Paschi di Siena SpA led the problems and in all nine Italian banks failed the test. All Spanish banks met the requirements but banks in Greece, Cyprus and Slovenia made up the list of other failed banks.

The last stress test was conducted in June 2013 and since banks, which cover 80% of assets in the euro zone, have raised capital and sold assets to bolster balance sheets.

Top 30 banks have raised €60 billion in the period and also raised additional €200 billion by selling assets.

However, the ECB report also said that the 130 banks had overstated the assets on the balance sheet by €48 billion, 2% of total assets.

In London trading, FTSE 100 index slipped 0.6% or 38.94 to 6,349.79 and in Frankfurt the DAX index declined 1.1% or 101.38 to 8,886.42.

In Paris, CAC 40 index dropped 1% or 41.64 to 4,087.26.

Novartis AG fell 0.3% to 85.45 francs after the Switzerland-based healthcare agreed to divest its influenza vaccines business to Australia-based biopharmaceutical CSL Limited for $275 million.

The transaction is expected to close in the second-half of 2015.

Asian Markets

Market indexes in Japan advanced and the yen weakened as investors shifted focus to domestic earnings.

The Bank of Japan said corporate service prices in September climbed 3.5% compared to previous month when prices were flat. Prices from a year ago month rose 0.1% after dropping 0.2% in August.

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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