 Oil hits stocks in Asia and Europe
(China Daily)
Updated: 2008-07-04 07:45
Stocks dropped across Europe and Asia yesterday as oil topped $145 a barrel, damping earnings prospects for carmakers and airlines and stoking concerns the global economy will slow further. US index futures declined too. Daimler AG, Toyota Motor and Air France-KLM Group slumped after oil rose to a record. ArcelorMittal and BHP Billiton Ltd led declines by commodity producers. Nvidia Corp, a maker of computer-graphics chips, tumbled 22 percent in Germany after cutting its sales forecast. The MSCI World Index lost 0.3 percent to 1,371 at 12:46 pm in London as nine of the 10 industry groups decreased. The index has fallen 18.5 percent from a record in October. US stocks sank, sending the Dow Jones Industrial Average into a bear market on Wednesday. The UK's FTSE 100 Index briefly slipped into a bear market yesterday. "I'm concerned about the prospects for an economic slowdown" and the negative impact on earnings, said Mark Bon, a London-based fund manager at Canada Life, which oversees about $15 billion. "Sentiment is so poor. There does not appear to be any obvious catalyst to change that." Europe's Dow Jones Stoxx 600 Index declined 0.8 percent, while the MSCI Asia-Pacific Index sank 1.3 percent. Futures on the Standard & Poor's 500 Index slipped 0.1 percent, as did futures on the Dow average before the release of the US June employment report. Earnings for Stoxx 600 companies will fall 1.7 percent this year, according to analysts' estimates. That's down from 11 percent growth predicted at the start of 2008. The UK's FTSE 100 dropped as low as 5,358.50, extending its decline from last year's high to 20.4 percent after credit losses and the worst housing slump in 30 years dimmed the earnings outlook for banks and retailers. The index recently traded down 0.3 percent at 5,389.4. Marks & Spencer Group Plc and Armour Group Plc dropped. Stocks fell in Japan for the 11th straight day, the longest losing streak in 54 years. Hyundai Motor Co retreated in South Korea. Financial stocks have led declines that erased almost $11 trillion from equity markets worldwide this year. Credit-related losses topping $400 billion, record oil prices and accelerating inflation have stoked concern policymakers will have to raise borrowing costs as the global economy slows. Stocks maintained losses after the European Central Bank increased its key interest rate by a quarter point to 4.25 percent. Central banks in Sweden and Indonesia also lifted rates yesterday. In the UK, the service industry contracted last month the most since October 2001, according to a survey by the Chartered Institute of Purchasing and Supply, adding to evidence that Britain is edging closer to a recession. Daimler, the world's second-largest maker of luxury cars, fell 1.8 percent to 37.49 euros. Toyota, which gets about half of its profit from North America, lost 0.8 percent to 4,900 yen. Hyundai Motor Co, South Korea's largest automaker, declined 4.5 percent. Air France tumbled 3.4 percent while Deutsche Bank AG downgraded Europe's biggest airline to "sell" from "hold", saying it expects further consensus downgrades to earnings forecasts. Agencies (China Daily 07/04/2008 page13) |
