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December 15, 2017
Thursday, October 2, 2014

Wall Street ends flat, small caps rebound in volatile day

US stocks ended flat in a volatile session today as energy stocks rebounded and investors bought beaten-down shares, especially small caps.

The S&P broke a three-day string of losses, recovering from a drop of as much as 1 percent, to close with the slimmest of gains. Earlier, it had briefly dipped below its 150-day moving average, a level it hasn't closed below since November 2012.

In late trading, investors temporarily set aside worries about weak economic growth and rich valuations that have hit stocks of late and added to volatility. The CBOE Volatility Index, Wall Street's favored gauge of investor anxiety, closed at 16.16, down 3.3 percent, after earlier reaching 17.98, its highest since March.

Small-cap stocks also reversed direction. The Russell 2000 ended up 1 percent and is now down about 9.3 percent from its March record, exiting correction territory.

The Dow Jones industrial average fell 3.66 points, or 0.02 percent, to 16,801.05, the S&P 500 gained 0.01 points to 1,946.17 and the Nasdaq Composite added 8.11 points, or 0.18 percent, to 4,430.20.

EUROPEAN MARKETS

European shares fell sharply today, with Italy's benchmark index recording its biggest one-day percentage drop in 18 months, after the European Central Bank gave fewer details than the market had expected about its plan to buy secured debt.

The pan-European FTSEurofirst 300 index closed 2.4 percent lower at 1,335.11 points, the biggest percentage drop in seven months, while Italy's FTSE MIB index fell 3.9 percent to 19,894.88 after the ECB's announcements.

The central bank would begin to buy covered bonds (CB), a form of secured debt, from banks in mid-October and purchase asset-backed securities (ABS) at some point in the fourth quarter of the year, ECB President Mario Draghi said, despite misgivings in Germany and elsewhere.

The planned moves are an attempt to kickstart a languishing euro zone economy after cutting interest rates last month. The ECB left its main refinancing rate at 0.05 percent on Thursday.

The ECB hopes the programme will spur a market for such credit and support lending to the small- and medium-sized firms that form the backbone of the euro zone economy, but equity investors remained sceptical.

Banks featured among the worst decliners, with the euro zone banking index down 4.1 percent, the biggest percentage drop in 15 months. Societe Generale, Unicredit , Intesa Sanpaolo and Banco Popular all fell between 4.8 and 5.9 percent.

The European oil and gas index was also hit hard, down 4 percent, with investors nervous following a sharp fall in oil to a 27-month low on concerns of a supply glut.

The FTSEurofirst 300 index, which is up just 1.6 percent this year, has fallen more than 5 percent since mid-September, when it climbed to its highest since early 2008.

The market has been dragged down by a flurry of sales and profit warnings as well as by growing concerns over the timing of the US Federal Reserve's expected rate hike next year.

Friday's non-farm payrolls data, which is likely to show that the US jobs market is improving, could strengthen the case for a rate hike.

Among other big movers, Kinnevik slumped 8.2 percent after shares in Rocket Internet plunged 13 percent on the day of their stock market debut in Frankfurt. Kinnevik owns around 14 percent stake in Rocket.

Rig firms Transocean and Seadrill fell 6.2 percent and 5.6 percent respectively, tracking peers that have taken a beating on lower oil prices, cutbacks in capex and an abundance of new rigs.

ASIAN MARKETS

Meanwhile, Japanese shares tumbled to one-month lows as disappointing global manufacturing activity surveys stoked concerns over global growth, while the first confirmed case of Ebola in the United States fed into a risk-averse mood.

Japan's Nikkei share average fell 2.6 percent to 15,661.99, while the broader Topix fell 2.9 percent to to 1,280.15 - its biggest percentage decline since mid-March.

Investors sold shares of exporters that had benefited from the fall in the yen in recent weeks.

The yen hit a six-year low of 110.09 yen to the dollar yesterday but bounced back to around 108.97 yen today, helped by safe-haven bids as concerns about the global economy resurfaced.

Surveys yesterday showed German factory activity shrank for the first time in 15 months, China's manufacturing sector barely grew, and the United States slowed more than expected.

Honda Motor fell 4.2 percent, Toyota Motor Co dropped 3.5 percent and Suzuki Motor shed 5.7 percent. The disappointing global manufacturing figures came as investors in Japan continued to grapple with the domestic economy's struggles to recover from a slump triggered by April's sales tax hike.

Global markets are also bracing for an end to the US Federal Reserve's third round of quantitative easing this month.

The first case of Ebola diagnosed in the United States only served to knock sentiment further, sending the US S&P 500 stock index skidding 1.3 percent to a seven-week low of 1,946.16.

The Ebola news pressured US airline shares and hit their peers in Tokyo, with the Tokyo Stock Exchange's air transport sub index falling 4.6 percent, its largest fall in more than two years.

Japan Airlines fell 4.6 percent and ANA Holdings dropped 4.8 percent.

Trading houses extended their losses as commodity prices fell and some of them reported huge losses on energy investments. Marubeni fell 3.4 percent after it was revealed that it is preparing to sell its costly stake in a Canada coal mine for what the potential buyer says could be as little as $1 - a day after a Tokyo rival said it would book losses in coal and iron ore investments. The new JPX-Nikkei Index 400 dropped 2.8 percent.

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Tags:  Stocks  shares  FTSEurofirst  Nikkei  US  Dow Jones  





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