UK markets snapped their winning streak and closed lower yesterday, amid reports of disagreement between Eurozone members over the bail-out proposal, and ahead of crucial vote in Germany on expansion of the rescue fund for Greece.
Man Group, the top laggard on the FTSE 100 index, plunged 24.9%, after it reported a sharp decline in its AUM over the second quarter.
Banks, Barclays, HSBC, Lloyds Banking and Royal Bank of Scotland, declined between 1.2% and 3.6%, as risk aversion rose.
Cairn Energy slid 6.5%, after it reported a disappointing drilling result in Greenland.
Miners, Anglo American, Vedanta Resources and Antofagasta, shed between 3.5% and 5.9%, as base metal prices fell.
FTSE 100 slumped 1.4% or 76.4 points to close at 5,217.6. FTSE 250 slipped 0.9% or 88.5 points to settle at 10,038.7.
European Trading Review
European markets closed in the negative territory yesterday, amid fears that Greek bonds holders would suffer higher-than-expected losses. This came following reports that seven of the 17 Eurozone members were petitioning for private creditors to take a reduction in the redemption value of bonds.
Banking stocks, BNP Paribas, Deutsche Bank and and Credit Agricole, shed between 0.3% and 5.0%, as risk appetite decreased among investors.
Technology stocks, Q-Cells, Solarworld and SMA Solar Technology, tumbled between 6.6% and 10.2%, after German power grid regulator Bundesnetzagentur reported a 69.0% drop in new solar-panels’ addition.
Deutsche Boerse plummeted 4.6%, after EU proposed a financial-transactions tax on all EU member states.
Shares of PSA Peugeot Citroen and Clariant came under pressure, following broker downgrades.
FTSEurofirst 300 index fell 1.2% to 927.3. German DAX Xetra 30 declined 0.9% or 50.0 points to 5,578.4. French CAC-40 edged down 0.9% or 27.8 points to 2,995.6.
US Trading Review
US markets fell yesterday, dragged down by a loss in commodity sector stocks, amid reports of a rift between European nations to chalk out a plan to resolve the debt crisis.
Coal miner, Alpha Natural Resource emerged as the top laggard on the S&P 500 index, losing 11.0%, while Peabody Energy lost 8.0%, as metallurgical coal price fell.
Cliffs Natural Resources lost 8.4%, following its decision to shut down and sell a biomass production plant, and incur a cost of $30 million before taxes in the third quarter.
Bank of America, the top laggard on the DJIA, lost 4.9%, while JPMorgan, KeyCorp and Citigroup declined between 3.5% and 4.0%, as Goldman Sachs cut its price target on a slew of banks.
Freeport-McMoRan Copper & Gold lost 7.2%, as gold and copper prices declined.
First Solar slumped 10.4%, amid concerns about its sources of finance for new projects, as its revenue exposure is highly Europe oriented.
DJIA lost 1.6% or 179.8 points to 11,010.9. NASDAQ shed 2.2% or 55.3 points to 2,491.6. S&P 500 fell 2.1% to 1,151.1.
Forex Trading Review
At 0400 BST today, the GBP is trading 0.3% higher against the USD at $1.5599, 0.1% lower against the EUR at €1.1492, and 0.3% higher against the JPY at ¥119.40.
The EUR is trading 0.4% higher against the USD at $1.3574. The currency is trading 0.3% higher against the JPY at ¥103.90.
The EUR is trading higher against the USD and JPY, ahead of German lawmakers’ vote on changes to a European bailout fund, on optimism that German Chancellor Angela Merkel would gather enough support from policy-makers on the European Financial Stability Facility.
Yesterday, the EUR ended lower against the USD and JPY, amid fears that European policy makers would fail to agree on a plan to prevent the spreading of the Eurozone debt crisis to other European countries, damping the demand for high yielding assets.
The CAD closed lower against the USD, on concern that the European debt crisis would hamper global economic growth and would have effect on country’s export revenue.
Commodities Trading Review
In Asia, crude oil for November delivery is trading marginally higher at $81.22 per barrel.
Yesterday, crude for November delivery dropped 3.8% or $3.24 to end at $81.21 per barrel, after the EIA report showed that the US commercial crude oil inventories increased by 1.9 million barrels during the week ended 23 September. This also came amid concerns that a slowdown in global economy would curb future energy demand.
The crude oil price came under pressure, as the rise in dollar decreased the demand for the commodities as an alternative investment.
Gold for immediate delivery is trading 1.3% higher today, at $1,609.1 per ounce.
Gold for December delivery declined 2.1% or $34.40 to settle at $1,618.10 per ounce yesterday, as investors took advantage of previous session gains and preferred to book profits.
Gold paced declines as the dollar rose against the major currencies, decreasing the demand for the precious metal as a hedge against inflation.
Financial Trading News
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'Crude Oil Spread Betting Markets Weaken as US Inventories Increase' edited by ETX Capital, updated 29-Sep-11
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