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Market Update

World Markets Deepen Losses in January, Euro Zone Defltation Trap Worries


Author: Nichole Harper
ticker.com
Last Update: 12:54 PM ET January 31 2014

12:50 PM New York – U.S. and World markets accelerated the decline on the last day of January. For the year, S&P 500 index is down 3.4%, major markets in Europe declined 3% and indexes in Japan closed down 8.5%, Hong Kong fell 5.5% and India dropped 3.1%.

Stocks on Wall Street were driven by actions in commodities and currencies markets as volatility and downward bias persisted in several markets around the world.

Copper declined for the eighth day in a row, the longest decline since fifteen years, aluminum fell 2% as China engineers a slowdown and demand for two commodities drop in Asia.

Natural gas plunged 9% after U.S. weather was forecasted to turn warmer, lowering the demand for heating oil and other fuels.

Emerging market currencies continued to drift lower after U.S. Federal Reserve Bank lowered its monthly bond purchase program by another $10 billion as promised in the last policy meeting.

Hungarian forint declined 0.8% to a 2-year low, Indian rupee eased 1%; and currencies in Argentina, Indonesia, South Africa, Thailand and Turkey eased more.

Markets in China, Hong Kong, Taiwan, South Korea, Malaysia and Philippines were closed for holidays.

S&P 500 index declined as much as 0.6% before recovering to a decline of 0.3% to 1,789.28 and the Nasdaq Composite Index fell 0.2% to 4,115.52.

European Markets

European markets trimmed losses at close but indexes in the day fell sharply as emerging markets worries spread and unemployment in the euro zone remained at a record high level and low January inflation rate sparked fears of deflation trap.

Unemployment in the monetary union remained at 12% in December and January inflation rate was record low 0.7%.

In London trading, FTSE 100 index dropped 0.4% or 29.32 to 6,509.13 and in Frankfurt the DAX index declined 0.5% or 51.1 to 9,322.51.

In Paris, CAC 40 index slumped 0.2% or 10.0 to 4,170.06. Market indexes in Turkey declined 1.1% after trade deficit widened in December.

RTS Stock Index, dollar based Russian market index, plunged 9.7% in the year so far and Federal Statistics Service said in its first estimate 2013 economic growth declined to 1.3% after 3.4% growth in 2012.

Russia’s economic growth declined for the fourth year in a row.

U.S. Stocks in Review

Amazon.com, Inc (AMZN) plunged 8.2% or $32.83 to $370.35 after the online market place operator reported sales in the fourth-quarter ending in December soared 20% to $25.59 billion.

Net income in the quarter surged 146.4% to $239 million or 51 cents a diluted share compared to $97 million or 21 cents. Analysts’ were expecting earnings per share of at least 65 cents.

For the first quarter, Amazon said net sales expected to be between $18.2 billion and $19.9 billion, or to grow between 13% and 24%.

The stock plunged after revenues and earnings trailed analysts’ estimates and capital expenditure continue to rise as sales growth decline.

Chipotle Mexican Grill Inc (CMG) soared 13.5% to $560.81 after the burrito chain reported fourth-quarter net income increased 30% on rising restaurant traffic.

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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