Global Markets overview 11/03/2011

U.S. Markets

U.S. stocks plunged on Thursday as weaker-than-expected economic reports from both domestic and overseas coupled with fears over the impact on oil price by pervasive unrest in the Middle East and North Africa weighed on the sentiment.

The Dow Jones Industrial Average plunged 228.48 points, or 1.87 percent, to 11,984.61. The S&P 500 index tumbled 24.91 points, or 1.89 percent, to 1,295.11; and Nasdaq Composite shed 50.70 points, or 1.84 percent, to 2,701.02.

Initial jobless claims in the US increased by 15,000 to 397,000 compared with the revised figure of 371,000 in the previous week, while markets had expected the jobless claims to rise 382,000 in the week. Also, the seasonally adjusted four-week moving average of initial claims, considered as a more accurate measure of employment trends than the weekly number, increased by 3,000 to 392,250.

Meanwhile, goods and services trade deficit in the U.S. edged up to $46.3 billion in January from the revised figure of $40.3 billion in December.

News from overseas also weighed on the sentiment as European debt concerns resurfaced following Moody’s downgrade of Spain debt.

Moody’s downgraded Spain’s debt by one notch to Aa2, citing concerns over the cost of restructuring of the country’s banking sector and also the government’s ability to reach its borrowing reduction targets. Also, the rating agency on Monday downgraded Greece’s sovereign debt by three notches from Ba1 to B1 with a negative outlook.

China swung to a surprise trade deficit in February of $7.3 billion, its largest in seven years, as the Lunar New Year holiday dealt an unexpectedly sharp blow to exports. Exports grew 2.4 percent in February against analysts’ estimation of 26.2 percent, while imports rose 19.4 percent against expectations of 32.3 percent.

Reports of Saudi police firing shots at anti-government protesters further rattled investors nerves (Saudi Arabia is the world’s largest oil exporter).
Meanwhile, the crisis in Libya is deepening as western powers prepare sanctions and military options against Moammar Gaddafi. Nonetheless, oil prices in New York fell almost 2 percent to $102.36 per barrel.

Among the Dow components, Alcoa, Exxon mobile and Caterpillar plunged more than 3 percent, while IBM and Bank of America declined more than 2 percent.

Starbucks Corp. (NASDAQ:SBUX) shares climbed 9.93 percent after the company agreed to a strategic relationship with smaller rival Green Mountain Coffee Roasters to expand its presence in the new and fast-growing U.S. single-serve coffee market.

U.S. Futures

Futures on the S&P 500 are down 0.67 percent, futures on the Dow Jones Industrial Average are down 0.70 percent and Nasdaq100 futures are down 0.71 percent.

European Markets

European stock markets declined in early trading on Wednesday, led by declines from insurance stocks after a powerful earthquake measuring 8.9 magnitude on Richter scale hit off Japan.

The Stoxx Europe 600 Index declined 0.77 percent to 275.75. DAX30 declined 66.67 points or 0.94 percent to 6,996.42, CAC 40 fell 35.26 points or 0.89 percent 3,928.73 and the FTSE 100 declined 29.02 points or 0.50 percent to 5,816.27.

European reinsurers slumped on prospects of big losses following the powerful earthquake. Swiss Reinsurance Co. plunged 5.3 percent and Munich Re declined 3.9 percent.

K+S AG declined 3.7 percent after BASF SE announced plans to sell its remaining stake in the potash maker, a holding that’s valued at about 1 billion euros

Asian Markets

Asian stock markets declined on Friday, following the slump in Wall Street overnight as weaker than expected economic reports from US and overseas added concerns to the strength of economic recovery.

Tokyo shares ended lower, led by declines from exporters. Nikkei slumped 1.72 percent or 179.95 points to 10,254.43.

Honda Motor declined 2.64 percent to 3,310 yen and Toyota Motor fell 1.5 percent to 3,595 yen, while Canon Inc. declined 0.78 percent.

Hong Kong’s Hang Seng index declined 411.73 points or 1.74 percent to 23,203.16 and Chinese Shanghai composite fell 0.73 percent or 21.54 points to 2,935.61.

China Construction Bank Corp. advanced 1.7 percent to HK$7.18 and Industrial & Commercial Bank of China Ltd. gained 1.29 percent to HK$6.27, while Cathay Pacific Airways Ltd. surged 4.52 percent to HK$18.94. CNOOC Ltd. Plunged 3.2 percent to HK$17.5 and HSBC Holdings Plc. Declined 1.07 percent to HK$82.80.

China swung to a surprise trade deficit in February of $7.3 billion, its largest in seven years, as the Lunar New Year holiday dealt an unexpectedly sharp blow to exports. Exports grew 2.4 percent in February against analysts’ estimation of 26.2 percent, while imports rose 19.4 percent against expectations of 32.3 percent.

South Korean shares ended lower on economic worries and earnings outlook. Seoul composite declined 26.04 points or 1.31 percent to 1,955.54. Hyundai Motor plunged 3.18 percent and Kia Motor declined 1.62 percent.