Quantcast
Latest Stories

Stocks stabilize after Japan drop rattles traders



Bank of Japan Gov. Haruhiko Kuroda, center, answers to a reporter’s question after meeting with Japanese Prime Minister Shinzo Abe at Abe’s official residence in Tokyo Thursday, June 13, 2013. The Nikkei 225 index, which plunged more than 6 percent earlier in the day, was 5.3 percent down by midafternoon to 12,571.47. AP Photo

PARIS— Positive U.S. economic data helped stabilize world stocks on Thursday after a sharp selloff in Japan put its main index in “Bear Market” territory, rattling investors.

Japan’s Nikkei fell 6.4 percent to close at 12,445.38, a drop of 21 percent from its high in May. When an index falls by more than 20 percent from a high, it is commonly defined as a bear market.

Japanese media reports said overseas hedge funds may be dumping the country’s equities after the Bank of Japan’s decision earlier in the week to refrain from additional monetary easing measures.

European stocks initially fell in reaction to the losses in Japan and after the World Bank cut its forecast for global growth in 2013 to 2.2 percent from 2.4 percent.

But they recovered somewhat after U.S. Commerce Department figures showed retail sales rose 0.6 in May, the strongest showing in three months.

By late afternoon in Europe, Britain’s FSTE 100 up 0.1 percent to 6,302 while Germany’s DAX fell 0.7 percent to 8,068. France’s CAC-40 was fractionally lower at 3,792.

Among notable losers was Royal Bank of Scotland, PLC, down 3.8 percent on the news CEO Stephen Hester will resign and the bank will cut 2,000 jobs.

“The World Bank is not alone among global forecasters in lowering its sights on growth, and there are no grounds yet for thinking the slashing of GDP projections is over,” said Stephan Lewis of Monument Securities.

The Dow Jones Industrial index was fractionally positive, rising just above the 15,000 mark to 15,007, while the S&P 500 index rose 0.2 percent to 1,615.99

Market sentiment has worsened generally since the chief of the Federal Reserve, Ben Bernanke, said the central bank might pull back on its $85 billion-a-month bond-buying program — known as quantitative easing — if U.S. economic data, especially hiring, improves.

“Ever since talk of Fed tapering was first mentioned U.S. bond yields have edged higher and money has leaked out of emerging markets and emerging market currencies,” said market analyst Michael Hewson of CMC Markets.

“Of course there is the other reason that for all of the stock market gains of recent months investors have finally woken up to the fact that current stock valuations are not supported by fundamentals in the current low-growth environment, and all the QE (quantitative easing) in the world can’t address that particular issue.”

Investors now expect some reduction in the Fed’s monthly asset purchases sometime this year. Fed stimulus has been one of the main reasons why many assets, such as global stock markets and emerging markets, have rallied in recent months.

Analysts said markets will likely remain on edge until next week’s Fed policy meeting for greater clarity on the timing and extent of any tapering.

“Mr Bernanke is riding a tiger he dare not dismount” for fear of disrupting the global recovery, said Lewis of Monument Securities.

Juichi Wako, equity market strategist at Nomura Securities Co. in Tokyo, said the drop on the Nikkei was due to a reversal of the money flow that had flooded Japan in recent months, partly on inflated hopes for “Abenomics,” as Prime Minister Shinzo Abe’s fiscal and monetary policies have been dubbed.

In April, the Bank of Japan announced a massive stimulus in an attempt to encourage economic growth and get inflation up to 2 percent. The euphoria drove the Nikkei up to five-year highs before enthusiasm waned.

Excitement is now ebbing, Wako said, and the yen is strengthening — a headwind for Japanese exporters.

The dollar weakened further against the yen, to 94.16 yen from 95.71 yen the day before.

Elsewhere in Asia, the Hang Seng index fell 2.2 percent to 20,887.04, while the Kospi in South Korea lost 1.4 percent to 1,882.73.

Mainland Chinese were pummeled as accumulating signs of a slowdown in growth in the world’s No. 2 economy caused investors to retreat. The Shanghai Composite Index slid 2.8 percent to 2,148.36, its lowest close in six months.

In other markets, the euro dropped to $1.3286 from $1.3331 late Wednesday, while the benchmark crude oil contract was down 21 cents to $95.67 per barrel in electronic trading on the New York Mercantile Exchange.


Follow Us


Follow us on Facebook Follow on Twitter Follow on Twitter


Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: Dow Jones Industrial index , Japan’s Nikkei , Royal Bank of Scotland , US Economic Data , World stocks , “Bear Market” territory

  • rolando mendoza

    stocks like a roller coaster. up, down, up, down.

  • Iggy Ramirez

    The Philippine Stock market was the hardest hit at 7.8%, wiping P19 billion overnight and registering a historic loss only seen in the last 12 years

  • bogli_anakdami

    ay sus ginoo… glad it’s over, for now… i almost executed my hold buy… t’was nearing my threshold call, di ba? yun lang…

  • bongarroyo

    ba’t inilabas kaagad ito ayaw ni pekeng torney sfakefire ng ganitong balita. LOL



Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94
Advertisement
Advertisement

News

  • Easterlies to prevail in Luzon, Visayas
  • Lacson eyes P106-B ‘Yolanda’ rehab masterplan
  • What Went Before: Malacañang allies alleged involvement in pork scam
  • Timeline: Napoles tell-all
  • 12 senators on Napoles ‘pork’ list, says Lacson
  • Sports

  • Mixers trim Aces; Painters repulse Bolts
  • Donaire junks Garcia as coach, taps father
  • ’Bye Ginebra: No heavy heart this time
  • UAAP board tackles new rules
  • Baguio climb to decide Le Tour de Filipinas
  • Lifestyle

  • No tourist draw, Malang the croc will remain wild
  • The best flavors of summer in one bite, and more
  • Homemade yogurt, bread blended with pizza, even ramen
  • Visiting chefs from Denmark get creative with ‘ube,’ ‘ buko,’ ‘calamansi,’ mangoes
  • Salted baked potatoes
  • Entertainment

  • Return of ‘Ibong Adarna’
  • Practical Phytos plans his future
  • In love … with acting
  • From prison to the peak of success
  • ‘Asedillo’ location thrives
  • Business

  • Cost-recovery provisions for affected gencos urged
  • This time, BIR goes after florists
  • Philippine Airlines to stop shipment of shark fins
  • PH banks not ready for Asean integration
  • Stocks down on profit-taking
  • Technology

  • No truth to viral no-visa ‘chronicles’
  • ‘Unlimited’ Internet promos not really limitless; lawmakers call for probe
  • Viber releases new design for iPhone, comes to Blackberry 10 for the first time
  • Engineers create a world of difference
  • Bam Aquino becomes Master Splinter’s son after Wiki hack
  • Opinion

  • Editorial cartoon, April 24, 2014
  • Talking to Janet
  • Respite
  • Bucket list
  • JPII in 1981: walking a tightrope
  • Global Nation

  • Filipinos in Middle East urged to get clearance before returning
  • PH seeks ‘clearer assurance’ from US
  • China and rivals sign naval pact to ease maritime tensions
  • What Went Before: Manila bus hostage crisis
  • Obama arrives in Tokyo, first stop of 4-nation tour
  • Marketplace