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Stocks: Tuesday’s review
Asian stocks fell, with the regional benchmark index posting its biggest two-day drop in a month, as China’s manufacturing growth slowed and Greece proposed a referendum on the Europe’s latest aid package for the country. Group of 20 leaders will convene Nov. 3-4 in Cannes, France, a week after euro-area authorities pledged to magnify the capacity of their rescue fund to 1 trillion euros ($1.4 trillion) and look beyond their borders for help in combating the debt turmoil posing the biggest threat to global economic growth. Europe has the capability to overcome its difficulties, Chinese President Hu Jintao said at a briefing yesterday in Vienna.
BHP Billiton Ltd., the world’s biggest mining company, dropped 2.7 percent to A$36.77 in Sydney. Jiangxi Jiangxi Copper Co., China’s largest producer of the metal, declined 5.3 percent in Hong Kong. Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal, slumped 5.5 percent to HK$4.10. Cnooc Ltd., China’s biggest offshore oil producer, slipped 4.3 percent to HK$14.60.SBC Holdings Plc, Europe’s biggest lender by market value, dropped 3.9 percent in Hong Kong on speculation a default by Greece will threaten bank earnings. Standard Chartered Plc, the U.K.’s second-biggest lender by market value, sank 4.5 percent to HK$179.50.
Panasonic Corp. sank 5.1 percent in Tokyo as the maker of Viera televisions predicted its worst annual loss in 10 years. The Osaka-based electronics maker said it expects a full-year loss of 420 billion yen ($5.4 billion), the biggest annual loss in 10 years, because of a stronger yen, declining sales and a one-time charge for restructuring its TV and chip operations.
DeNA Co. tumbled 20 percent after the Japanese website operator posted profit that missed its own forecast. JPMorgan Chase & Co. cut its rating on the stock to “underweight” after the company reported net income of 17.6 billion yen for the six months through Sept. 30, missing its own forecast by 5.1 percent.
Hyundai Development Co., South Korea’s second-biggest homebuilder by sales, plunged 12 percent to 20,650 won in Seoul. Citigroup Inc. lowered its rating on the stock to “neutral,” citing weaker-than-expected third-quarter earnings.
European stocks sank the most in five weeks, as Greece’s government called a referendum on its latest bailout package, spurring concern that the country may default. Papandreou’s gambit risks pushing the country into default if voters reject the financial accord. An opinion poll published on Oct. 29 showed most Greeks believe the euro area’s expanded bailout package and debt writedown are negative. Leaders from the Group of 20 meet at a summit on Nov. 3-4 in Cannes, France, a week after the euro area’s authorities pledged to expand their rescue fund to 1 trillion euros ($1.4 trillion). They have already sought financial help from China and cooperation from the International Monetary Fund. German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet tomorrow in Cannes before the summit.
National benchmark indexes tumbled at least 2 percent in all 16 western European markets that were open today, except Iceland. France’s CAC 40 Index dropped 5.4 percent, Germany’s DAX Index lost 5 percent and Italy’s FTSE MIB Index plunged 6.8 percent. Greece’s ASE Index sank 6.9 percent.
Credit Suisse Group AG and Danske Bank A/S led a selloff in lenders, both sliding more than 6.5 percent, after posting earnings that fell short of analysts’ estimates. National Bank of Greece SA sank 15 percent to its lowest price since 1992 in Athens.
Barclays Plc dropped 9.5 percent to 176.8 pence after UBS AG lowered its recommendation for Britain’s second-largest bank by assets to “neutral” from “buy.”
Mining companies declined with copper prices as a report showed a drop in manufacturing in China, the world’s biggest consumer of the base metal. The Purchasing Managers’ Index fell to 50.4 in October from 51.2 in September, the China Federation of Logistics and Purchasing said in a statement. Xstrata Plc declined 6.6 percent to 976.1 pence, Antofagasta Plc retreated 4.5 percent to 1,114 pence and BHP Billiton Ltd., the world’s largest mining company, lost 2.7 percent to 1,915 pence.
Sandvik AB dropped 6.5 percent to 84.30 kronor. The world’s biggest maker of metal-cutting tools posted a 60 percent plunge in third-quarter profit to 626 million kronor ($94 million) after a writedown on goodwill for a business it plans to sell. The company also said it will cut 365 jobs in Sweden.
Daimler AG paced a selloff in carmakers, falling 5.9 percent to 34.81 euros after Barclays downgraded the world’s third-largest maker of luxury vehicles to “underweight” from “equal weight.”
U.S. stocks dropped, driving the Standard & Poor’s 500 Index to the biggest two-day slump in a month, on concern that a Greece referendum pledged by Prime Minister George Papandreou may threaten Europe’s bailout. Greece’s referendum poses a threat to financial stability in the euro region and increases the risk of a “disorderly” default, Fitch Ratings said. Stocks extended losses as government spokesman Angelos Tolkas said Papandreou will proceed with plans for a referendum on the Greek financing package. Papandreou’s announcement threatens to overshadow a Nov. 3- 4 Group of 20 summit in Cannes, France. German Chancellor Angela Merkel and French President Nicolas Sarkozy held emergency talks on Greece today and called on Europe to implement the package of measures thrashed out in Brussels last week. The plan, designed to aid Greece and stem the wider debt crisis, is “more necessary than ever today,” they said in a joint statement issued in Berlin and Paris.
Stocks also fell after data showed a Chinese manufacturing index dropped to the lowest level since February 2009. In the U.S., manufacturing grew less than forecast in October, depressed by a drop in inventories that may set U.S. factories up for stronger growth heading into 2012.
All 10 groups in the S&P 500 fell as gauges of financial, energy and industrial shares lost at least 3 percent.
Citigroup Inc. and Morgan Stanley retreated more than 7.6 percent, following a 6.2 percent tumble in European lenders. Exchange operators slumped after U.S. lawmakers said they will propose a tax on financial transactions such as stock and bond trades. The New York Stock Exchange plans to delist shares of MF Global Holdings Ltd., citing its bankruptcy filing, and the stock will probably move to an over-the-counter listing venue.
MetroPCS Communications Inc. fell 9.9 percent, the most in the S&P 500, to $7.66. The pay-as-you-go U.S. wireless carrier reported third-quarter profit that missed analysts’ estimates as subscriber growth slowed for the second consecutive quarter.
Baker Hughes Inc. tumbled 7.7 percent to $53.54. The oilfield contractor reported third-quarter earnings excluding some items of $1.18 a share, missing the average analyst estimate by 3 percent, according to Bloomberg data.
Advanced Micro Devices Inc. sank 9.1 percent to $5.30. The Sunnyvale, California-based maker of chips for Apple Inc.’s computers failed to persuade a U.S. judge to halt a patent dispute S3 Graphics Co. has against Apple at the U.S. International Trade Commission, according to a filing with the trade agency.
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