4:55 PM New York – Wall Street joined the European markets and lowered economic growth expectations and began wavering on the outcome of the latest round of talks in the euro zone after a string of weak economic data. Australian mining companies began to scale back megaprojects expansion plan as twelve-year old commodities boom loses steam.
The pull back began in earnest in New York and in Europe as leaders of the euro zone hold firm and demand Greece to do its part in implementing austerity measures.
The six-month global markets rally is petering out on the latest string of economic data and flagging optimism in the euro zone leaders and economies.
Any outcome at the end of this round of meeting is likely to disappoint investors. Markets in Europe and around the world have built up expectations of a significant step from the European Central Bank to support the flagging sovereign bond market. And, that confidence has begun to waver.
The latest string of economic data from China, Europe and U.S. were not encouraging either. U.S. jobless claims rose 4,000 to 372,000 surprising many market economists. The U.S. Fed members are looking to apply new stimulus and the euro zone was confirmed in the recession in the current quarter and China manufacturing decelerated at the fastest pace in August in nine months and inventories of unsold goods shot up at the fast pace in a year.
Separately, Australian mining companies have started pulling back mega investment plans in expanding capacities to mine iron ore and other minerals after the confidence in ever expanding demand from China, India and South Korea was recalibrated in the last three weeks.
In corporate news, Sony Mobile plans to slash 1,000 jobs and to move headquarter from Sweden to Tokyo. Rockwood Holdings agreed to acquire Talison for C$724 million.
Big Lots plunged 21% on a profit decline and the deep discount retailer lowered the outlook. Guess tumbled 19% as quarterly net dropped 45%. Hewlett-Packard declined on 7% after it reported the largest quarterly loss. Synopsys third quarter net jumped 45%.
The European indexes turned lower after a downturn in euro zone economy extended into the seventh month in August. The German economy expanded in the second quarter. The UK mortgage approvals rose more than estimated in July.
Stocks in Tokyo recovered from the early loss in indexes of as much as 0.8% on the growing evidence of global economic slowdown after Chinese manufacturing contracted and the U.S. Fed weighed more stimulus measures. The yen strengthened.
Australian stocks were caught between weak international market sentiments and a growing consensus that the twelve year mining boom may have run out its course. Fortescue reported rising profit and held its earlier guidance for the iron ore industry. Qantas reported its first loss in 17 years.
Commodities, Bonds and Currencies
The yield on 10-year bond traded lower to 1.67% and on 30-year bond edged down to 2.79%.
The U.S. dollar inched lower to $1.256 to a euro and increased against the Japanese yen to 78.46 yen.
Immediate delivery futures of Texas crude oil decreased $1.15 to $96.11 a barrel and Brent crude fell 13 cents to $114.78, futures of natural gas rose 0.3 cents to $2.83 per mbtu and gasoline price edged up 0.59 cents to 311.01 cents a gallon.
In metals trading, copper increased 2.3 cents to $3.483 per pound, gold added $31.70 to $1,672.20 per ounce and silver increased 89 cent to $30.54.