March 06, 2012 at 17:39 PM EST
Global Markets Overview - 03/07/2012
U.S. stocks were on pace for their biggest decline this year, hurt by soft readings on global economic growth and concern over a looming deadline for Greece's bond swap with private bondholders.
(IBTimes) -- 03/06/2012 --

FROM MORRISON SECURITIES PTY LTD.:

U.S. EQUITY MARKETS

U.S. stocks were on pace for their biggest decline this year, hurt by soft readings on global economic growth and concern over a looming deadline for Greece's bond swap with private bondholders.

Stock drifted to session lows early in the afternoon. The Dow Jones Industrial Average fell 201 points, or 1.6%, to 12762. The Dow industrials have gone 45 sessions without closing with a 100-point decline, and haven't shed more than 200 points in a single session since late November.

The Standard & Poor's 500-stock index declined 21 points, or 1.5%, to 1343 and the Nasdaq Composite shed 42 points, or 1.4%, to 2909.

The benchmarks were poised to notch a third straight session in the red. All 10 sectors of the S&P 500 lost ground, with financial and material stocks leading Tuesday's declines.

Alcoa, down 3.9%, Caterpillar, off 3.8%, and Bank of America, down 3.3%, fell most among blue chips. Merck & Co. declined 2.1% after the company said it expects its first-quarter profit to be lower than Wall Street estimates.

Tuesday's stock declines came as European markets fell on increasing worries about a swap of Greek debt by private creditors and weak signals on economic growth.

EUROPEAN EQUITY MARKETS

Private investors have until Thursday to decide if they will participate in the debt restructuring, in which they would write off 53.5% of Greek government debt they own.

The bond swap is an integral part of a second bailout loan for Greece that aims to keep it from becoming the first euro-zone member to default.

Media reports said that the Institute of International Finance a Washington-based banking trade group representing Greece's creditors warned in a memo dated last month of dire consequences of a Greek default, saying it would likely force Italy and Spain to seek financial aid.

Additionally, a second reading on the euro zone's combined fourth-quarter gross domestic product showed a contraction of 0.3% in the final three months of 2011.

Another soft spot for global growth was Brazil, Latin America's largest economy. Data showed that fourth-quarter GDP rose less than expected.

The latter part of this week is full of readings on the U.S. labor market, culminating Friday in the Labor Department's closely watched employment report.

In corporate news, shares of Monster Worldwide rallied 9.6% after the online job-search company said it retained financial advisers to assist it in reviewing strategic alternatives.

Consol Energy will idle a mining unit in Virginia and reduce its continuous mining operating schedule to five days a week due to decreased international demand for its metallurgical coal. Shares fell 2.2%.

Germany's Merck KGaA said a late-stage trial for its experimental cancer vaccine Stimuvax will continue with a final result expected in 2013. Shares of Oncothyreon, which is developing Stimuvax with Merck KGaA, tumbled 39% as the final results were expected before then.
 
European stock markets dropped Tuesday, as banks and resource shares fell on concerns about global growth and as investors looked nervously ahead to Greece's crucial debt swap.

The Stoxx Europe 600 index closed 2.7% lower at 258.46, the biggest drop since November. The French CAC 40 index lost 3.6% to 3,362.56, London's benchmark FTSE 100 index fell 1.9% to 5,765.80, and the German DAX 30 index dropped 3.4% to 6,633.11.

The broader European banking sector and resource firms led the pullback, as stocks continued to fall in the wake of a growth-target cut by China.

Failure to complete the swap could endanger Greece's second bailout, potentially leading to a hard default. Rumors renewed worries Greece wouldn't get enough participation and pushed European stocks lower.

The rumors were later denied by Greek officials, according to news reports. Shares of French banks were among the biggest decliners in the pan-European index: Credit Agricole SA fell 7.2%, Societe Generale SA lost 7.8%, and BNP Paribas SA traded 6.4% lower.

Peugeot SA fell 3.5% on reports the car maker plans to increase capital by EUR1 billion to fund an alliance with General Motors Co. Banks were also down in London, with HSBC Holdings PLC off 1.8%, Barclays PLC down 5.5% and Lloyds Banking Group PLC trading 3.9% lower.

Resource stocks declined on the outlook of slower growth in China. In the energy sector, BP PLC fell 2.9% and BG Group PLC shed 3%. Among miners, Antofagasta PLC lost 4.3%, Eurasian Natural Resources Corp. PLC shed 5% and Evraz PLC was 6.2% lower. In Germany, Commerzbank AG fell 6.7% after ING cut its rating to hold from buy on worries about downside earnings risk.

BMW AG fell 5.1% and Volkswagen AG lost 4.5%. Daimler AG shed 5.3% as the U.S. National Highway Traffic Safety Administration late Monday said the auto maker recalled more than 100,000 trucks in North America.

ASIA-PACIFIC EQUITY MARKETS
Asian stock markets fell sharply Tuesday, with steelmakers among the top decliners, as investors continued to fret over China's economic growth.

Hong Kong's Hang Seng Index lost 2.2%, the Shanghai Composite Index fell 1.4%, Japan's Nikkei Stock Average ended 0.6% lower, and South Korea's Kospi dropped 0.8%.

With global growth back under the spotlight, commodity-linked firms weakened in Asian trading, after many key resource prices fell overnight.

Japanese oil majors declined, with JX Holdings down 1.2%, and Inpex 0.9% lower. In Hong Kong, Aluminium Corp. of China fell 5.3%, while Jiangxi Copper lost 4.8% and PetroChina fell 2.3%.

The cut in China's economic outlook and indications the nation will scale back infrastructure spending weighed on steel makers across the globe. Asia-Pacific steel firms under pressure included Posco, down 3.4%, and Hyundai Steel, down 1.8%, in Seoul.  

Japanese steel maker Kobe Steel fell 3.8% after the firm said that it won't pay a term-end dividend due to challenging trading conditions. Rival JFE Holdings declined 3.1%, and over in Hong Kong, Angang Steel fell 7.6%.

Shares exposed to global trade also suffered Tuesday. Hong Kong-listed ports operator Cosco Pacific fell 5.1%, while Seoul-listed shipping firm STX Pan Ocean lost 4.6%.

Among Japanese shippers, Mitsui O.S.K. Lines dropped 2.8%, while Kawasaki Kisen Kaisha fell 3.8%, and Nippon Yusen K.K. dropped 2.5%. AIA Group tumbled 8.4% in Hong Kong as shares resumed trading after news American International Group Inc. had sold off shares in the insurer.

COMMODITIES
Copper closed 2.5% lower on the London Metal Exchange Tuesday after worries over economic growth in China and the euro zone sent commodities, equity markets and the euro into the red.

LME three-month copper ended the PM kerb close at $8,289 a metric ton, down $215.50 from Monday's finish. It is the market's lowest close since Feb. 20.

Crude oil prices fell Tuesday, tracking a pullback for stocks and other assets amid concerns about slowing global growth that included a warning about Greece's debt crisis.

Light, sweet crude oil for April delivery on the New York Mercantile Exchange settled 1.9% lower at $104.70 a barrel, its lowest since Feb. 17. Gold futures settled below $1,700 for the first time in six weeks, down nearly 2% as investors sought the safety of cash on renewed concerns over Greece, a stronger dollar and data showing weaker inflation.

The most actively traded contract, for April delivery, fell $31.80, or 1.9%, to settle at $1,672.10 a troy ounce on the Comex division of the New York Mercantile Exchange.

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