NEW YORK (AP) U.S. stocks fell for a second day on Tuesday following a wave of selling overseas on fears that a slump in commodity prices was far from over.
Advertisement
“The sustained USA crude price below $40 is a bit of a shock to investors”, said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York, as Reuters reported. Most markets in Southeast Asia were lower. “The energy sector is having trouble adapting”.
The Dow Jones industrial average was down 134 points, or 0.8 percent, to 17,594. It was down as much as 245 points earlier. The Standard & Poor’s 500 index gave up 22 points, or 1.1 percent, to 2,056.
Japan’s Nikkei .N225 briefly bucked the trend, before turning lower on the day, after revised data showed Japan had dodged a recession in the third quarter, with GDP up an annualised 1.0 percent, compared to a preliminary reading of a 0.8 percent fall.
In Asia, stock markets risked slipping to two-month lows on Wednesday as crumbling oil prices battered energy and resource shares, with cooling demand from China putting more pressure on resources-reliant economies. Indonesia’s Jakarta Composite index was losing 1.3 percent, Malaysia’s KLSE Composite was down 0.4 percent, Singapore’s Straits Times was moving down 0.3 percent and the Taiwan Weighted lost 1.4 percent. Exports fell by a worse-than-expected 6.8% on-year, marking the fifth straight month of declines.
Still, analysts say opportunistic Chinese buyers may have merely been taking advantage of a fresh slump in commodity prices, and will likely continue to export large quantities of finished products such as steel and diesel fuel because demand is not strong enough at home. Traders said the recovery in Brent was largely a result of short covering, the surprise lift in Japanese machinery orders and Chinese tax reforms aimed at encouraging imports, including of energy-intensive machinery.
“Given the weak global growth and falling commodity prices, China s trade outlook remains challenging”, Larry Hu, Head of China Economics at Macquarie Securities in Hong Kong, wrote in a report ahead of the figures. Copper inched up less than a penny to $2.05 a pound. Since China devalued the yuan on August 11 – by cutting the reference by 1.86 percent – the currency has sunk 3.3 percent, helped in part by its recent elevation to International Monetary Fund reserve currency status. Canadian Pacific fell $4.35, or 3.3 percent, to $126.13. Crude did get some temporary respite from Japan’s robust machinery orders data, and Brent futures were last up 1.5 percent at $40.85 a barrel after falling to $39.81 overnight, lowest since February 2009.
CURRENCIES: The U.S. dollar was trading at 122.88 yen, down from 122.99 yen in the previous session. Benchmark 10-year Treasury notes US10YT=RR were last down 1/32 in price to yield 2.24 percent, from a yield of 2.23 percent late on Monday.
Advertisement
In fuel-futures trading, wholesale gasoline fell 0.6 cents to $1.204 a gallon, heating oil slipped 2 cents to $1.259 a gallon, and natural gas edged up 0.3 cent to $2.07 per 1,000 cubic feet. The euro rose to $1.0982 from $1.0890.
