UK markets closed lower, amid renewed concerns over the debt situation in Greece.
Among miners, Vedanta Resources, the top laggard on the FTSE 100 index, plunged 8.3%, while Rio Tinto and Xstrata retreated 2.4% and 3.6%, respectively. This came as Morgan Stanley reduced its outlook on the mining sector in the wake of diminishing prospects for global growth.
Burberry extended its losses over the previous sessions, shedding 7.0%, amid concerns over its exposure to the Chinese market.
Barclays, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered lost between 3.2% and 4.5%.
Precious metals miners, Fresnillo and Randgold Resources, bucked the trend, rising 1.1% and 3.7%, respectively, tracking a rise in gold prices.
Sainsburys gained 2.3%, following an upgrade to “Buy” from “Hold” at RBS.
FTSE 100 shed 1.0% to close at 5,075.5, while FTSE 250 slipped 0.7% to 9,750.6.
European Trading Review
European markets closed lower yesterday, as concerns about the pace of global economic recovery deepened, amid speculation that Greece would miss its deficit reduction target for 2011 and 2012, and fail to secure an additional bailout package from the EFSF.
Market sentiments dampened further on report that showed Europe’s manufacturing industry contracted in September.
Banks, Commerzbank, ING Groep and Societe Generale, tumbled between 5.2% and 7.3%, amid speculation that lenders in Austria and Belgium would require additional support from the government and as risk aversion increased among investors.
Dexia plunged 10.0%, amid speculation that Moody’s Investors Service might downgrade its three main operating entities.
Car makers, BMW, Daimler and Volkswagen, plummeted between 2.3% and 5.7%, amid speculation that China’s economy is slowing more-than-expected.
Alcatel-Lucent sank 12.0%, after Nomura Holdings cut its view on the stock to “Bearish” from “Neutral”.
FTSEurofirst 300 index declined 1.2% to 912.3. German DAX Xetra 30 fell 2.3% to end at 5,376.7. French CAC-40 edged down 1.9% to settle at 2,926.8.
US Trading Review
US markets tumbled yesterday, as worries over Greece's solvency overshadowed an upbeat US manufacturing data.
Bank of America, the biggest decliner on the DJIA, plunged 9.6%, while Goldman Sachs, Morgan Stanley and Citigroup dropped between 4.7% and 9.8%, as worries over the European debt contagion intensified.
Alcoa slumped 7.0%, amid demand concerns for aluminium, while Arch Coal lost 9.3%, as it slashed its outlook for the full year.
AMR plunged 33.1%, amid speculation that it was on brink of bankruptcy.
Gentiva Health Services, the top laggard on the NASDAQ, slumped 33.3%.
LHC Group and Amedisys dropped 8.3% and 9.6%, respectively, after a US inquiry revealed that the home-care providers had made additional visits to Medicare patients to maximize their reimbursements from the federal program.
Dow Jones slumped 2.4% to 10,655.3. NASDAQ tumbled 3.3% to 2,335.8. S&P 500 shed 2.9% to end at 1,099.2.
Forex Trading Review
At 0400 BST today, the GBP is trading 0.1% higher against the USD at $1.5444, marginally lower against the EUR at €1.1699, and 0.2% higher against the JPY at ¥118.45.
The EUR is trading 0.1% higher against the USD at $1.3201. The EUR is trading 0.2% higher against the JPY at ¥101.25.
The JPY is trading lower against the USD and the EUR, as Goldman Sachs Group cut its forecast for Japanese economic growth for this and the next year citing a global economic slowdown.
The AUD is trading lower against the USD, as concerns that the global economy recovery is slowing, dampened demand for higher-yielding assets. AUD also dropped ahead of the Reserve Bank of Australia’s meeting today, where policy makers are expected to hold interest rates
The NZD is trading lower against the USD, following a report that showed New Zealand’s business confidence had eased in the three months to September.
Yesterday, the EUR closed lower against the USD and JPY, as concerns about European sovereign debt crisis deepened. This came amid fears that Greece would not receive the next bailout package from international lenders, and after data showed that European manufacturing activity declined in September.
The CAD ended lower against the USD, as concern that the US economy is faltering coupled with lower commodity prices decreased the demand for the commodity linked currency.
The GBP closed lower against the USD, amid speculation that the Bank of England would purchase government-bonds to provide further stimulus to the economy.
Commodities Trading Review
In Asia, crude oil for November delivery is trading 1.4% lower or $1.11 lower at $76.50 per barrel.
Yesterday, crude oil for November delivery dropped 2.0% or $1.59 to $77.61 per barrel. This came amid fears that Greece might default on its debt, after its government stated that it would fall short of its deficit target this year, overshadowing positive US economic data on manufacturing, construction and new vehicle sales.
A retreat in the European manufacturing activity raised worries about future oil demand.
Gold for immediate delivery is trading marginally higher today, at $1,667.05 per ounce.
Gold for December delivery added 2.2% or $35.40 to end at $1,657.70 per ounce yesterday. This came as a decline in global equity markets and speculation that Greek’s sovereign-debt crisis might worsen, forced investors to purchase the yellow metal as a safe haven asset.
Financial Trading News
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'Crude Oil Spread Trading Markets Fall as Greece Looks Set to Miss Targets' edited by ETX Capital, updated 04-Oct-11
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