Global Markets Overview - 15 November 2012

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By Christine Gaylican | November 15, 2012 1:48 PM EST

U.S. STOCK MARKETS

U.S. stocks stumbled toward a fresh three-month low as growing political concerns in the U.S. and European economic weakness offset gains in some technology shares.

The Dow Jones Industrial Average fell 110 points, or 0.9%, to 12647 in afternoon trading Wednesday. The Standard & Poor's 500-stock index lost nine points, or 0.7%, to 1365, and the technology-heavy Nasdaq Composite shed 15 points, or 0.5%, to 2869.

Stocks started the day in positive territory but quickly declined. If the Dow finishes with a loss, it will be its fifth decline in the six days since Election Day.

The blue-chip measure has lost about 4% over that span. The Nasdaq, meantime, is now about 10% off its mid-September high, putting it in danger of closing in correction territory, generally defined as a fall of 10% or more from its recent peak. All 10 sectors of the S&P 500 traded lower.

Weighing most heavily on the downside were industrial, financial and materials shares. Boeing, Home Depot and Bank of America led the Dow components lower.

Some market watchers pointed to relatively weak economic data and fresh economic concerns in Europe to explain the selloff. Hurting market sentiment was a tough stance taken by President Barack Obama in the tense negotiations over U.S. deficit reduction.

Unless politicians can reach a compromise, taxes are set to rise and government spending to fall in the new year, potentially pushing the U.S. into recession.

Late Tuesday, the president said he would seek $1.6 trillion in new tax revenue, far more than Republicans are likely to accept. That position could make for a more contentious environment with congressional Republicans ahead of the self-imposed Jan. 1 deadline, according to market watchers.

In addition, investors kept an eye on the Middle East, after Hamas officials in the Gaza Strip said an Israeli airstrike killed the commander of its military wing, sending oil prices higher.

Gains in some technology stocks mitigated the losses, after a strong earnings report from Cisco Systems, a Dow component. The network-equipment maker jumped 5.7% after its quarterly earnings and revenue exceeded analysts' expectations, helped by strength in its services business.

However, Cisco's strong gain did little to help the price-weighted Dow, given the stock's low weighting on the blue-chip measure.

The Cisco-related boost was more than offset by a decline at Boeing, which gave up 2%. Juniper Networks benefited from Cisco's strong earnings, rising 2.7%. Technology and telecommunications were mostly higher, as Hewlett-Packard rose 0.6% and AT&T gained 0.2%.

EUROPEAN STOCK MARKETS
 
Worries over the so-called fiscal cliff in the U.S. and anti-austerity demonstrations across southern Europe kept European shares under pressure Wednesday, although strong corporate updates helped limit losses.

The Stoxx Europe 600 index dropped 0.9% to close at 268.14, its lowest level since early September. Strikes and protests were seen across some of the region's largest countries, with labor unions organizing coordinated walkouts in Spain, Greece, Portugal and Italy.

However, investors' attention was focused largely across the Atlantic, analysts said. Among major movers in the index, shares of Telekom Austria AG jumped 9.2% after the carrier confirmed its 2012 outlook.

Shares of Vivendi SA rose 4.7%. The French media and telecom company late Tuesday raised its full-year earnings forecast following stronger-than-expected performances by different units.

But shares of ICAP PLC sank 9.2%, after the interdealer broker reported a 26% drop in pretax profit for the six months to Sept. 30. Spain garnered attention.

Economic and Monetary Affairs Commissioner Olli Rehn reportedly said he doesn't see the need for the country to ask for a bailout in the near future and that the government has taken effective action on budget deficits for 2012 and 2013.

The IBEX 35 index lost 0.3% to 7,673.00. Adding to the downbeat mood, industrial production data for the struggling euro zone showed activity slumped 2.5% in September.

In the U.K., the Office for National Statistics said the unemployment rate from July to September was 7.8%, slightly better than expectations of a 7.9% reading.

Most U.K. shares fell, however, with Vodafone Group PLC down 1%. Citigroup cut its price target on the wireless carrier, citing slower growth. Shares of Eurasian Natural Resources Corp. fell 4.6% and those of Rio Tinto PLC lost 2.1%.

The FTSE 100 index fell 1.1% to 5,722.01. Among German stocks, E.ON AG shed 3.1% after Societe Generale downgraded its rating on the utility firm.

The DAX 30 index fell 0.9% to 7,101.92. In France, shares of Veolia Environnement SA gained 0.5%, after Societe Generale initiated coverage of the waste and water services firm with a buy rating. Banking shares posted broad-based losses. Shares of Credit Agricole SA lost 2% and those of Societe Generale SA gave up 1.4%. The CAC 40 index fell 0.9% to 3,400.02.

ASIA-PACIFIC STOCK MARKETS

Asian shares ended higher Wednesday, rising after several days of declines, as the conclusion of China's 18th Party Congress helped Chinese markets.

The meeting in Beijing is closely watched because it is expected to result in China deciding upon its next generation of leaders. In particular, investors are keen to find out the size and composition of the standing committee, China's highest governing body.

The biggest beneficiary was Hong Kong, where the Hang Seng Index ended the day up 1.2% at 21441.99, with strong performance from banks and commodity stocks. Industrial and Commercial Bank of China was 3% higher and Aluminum Corp. of China advanced 2.8%.

The Shanghai Composite added 0.4% to end at 2055.42. Persistent concerns over the U.S. fiscal cliff, along with uncertainty over Greece's debt situation, continued to weigh on sentiment in other markets across the region.

A softening in the yen occurred too late in the day to help Japanese stocks. The Nikkei Stock Average finished up just 0.04% to 8664.73, allowing the market to snap a seven-day losing streak by the barest of margins. Sharp rose 7.2% on a Kyodo News report that the company is in final talks with Intel Corp. to receive around Y30 billion to Y40 billion of investment.

However, Sharp denied the report. Machinery and equipment parts maker THK dropped 2.1% after the company revised down its profit forecast for the year to Y9 billion from Y22.5 billion, due to weaker-than-expected demand. South Korea's Kospi Composite was up 0.2% to 1894.04.

COMMODITIES
 
Most base metals on the London Metal Exchange closed slightly higher, amid muted trade in Europe as investors awaited fresh cues for direction.

Flagship metal copper struggled to hold onto brief gains, however, and closed open-outcry trading lower, falling 0.5% on the day at $7,640 a metric ton.

Technical support for the metal is seen at $7,580/ton, with resistance at $47,850/ton. Crude futures Wednesday settled somewhat higher in a low-key trading day dominated by modest swings in a tight range.

Oil futures on the New York Mercantile Exchange for December delivery settled at $86.32 per barrel, up 94 cents or 1.1%. Brent oil futures were trading at $109.65, up $1.39.

Gold gained, taking its cues from a rise in the euro against the U.S. dollar and hopes of higher demand during a key buying period for top importer India. The most-actively traded contract, for December delivery, rose $5.30, or 0.3%, to settle at $1,730.10 a troy ounce on the Comex division of the New York Mercantile Exchange. Compiled from MORRISON SECURITIES PTY. LTD.

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