Stocks Slump on Global News (IYJ, FXE, FEZ, FXI, SPY)
ETFs we’re watching for Monday, April 23, 2012
Disappointing economic news from around the world got the American stock markets off to a negative start on Monday.
Markit Economics released its composite index of Eurozone services and manufacturing which declined to 47.4 from 49.1 in March, despite economists’ expectations for a slight increase (NYSEARCA:VGK). Widespread concern that the Netherlands will lose its AAA bond rating as a result of an impasse over austerity measures impacted the share values for automobile manufacturers. Germany’s DAX Index fell by 2.93% to 6,552 (NYSEARCA:EWG).
Spain’s economy contracted by 0.4% during the first quarter of 2012, marking the second consecutive quarter of decline. The nation is now officially in recession. The yield on Spain’s ten-year bond reached as high as 6.02% on Monday. Spain’s IBEX 35 Index swooned by 2.71% to 6,849 (NYSEARCA:EWP). Italy’s consumer confidence dropped to 89.3 – its lowest level in fifteen years – according to a report from Istat (NYSEARCA:EWI).
China’s Shanghai Composite Index declined by 0.76% to 2,388 following the preliminary release (by Holdings Plc and Markit Economics) of the nation’s Purchasing Managers’ Index for April. Despite an increase to 49.1 from the March PMI of 48.3, any level below 50 signals economic contraction. The final reading will be due on May 2 (NYSEARCA:FXI). Hong Kong’s Hang Seng Index declined by 1.84% to 20,624.
As of 10:05 EDT, the Euro STOXX 50 Index advanced by 0.69% to 2,300 (NYSEARCA:VGK) and the FTSE 100 rose by 0. 23% to 5,757 (NYSEARCA:EWU). The German DAX Index sank by 0.80% to 6,724 (NYSEARCA:EWG).
Japan’s Nikkei 225 Stock Average declined by 0.20 percent to 9,542 as public opposition to a restart of the nuclear reactor at Kansai Electric Power caused the company’s share value to decline in excess of 4%. A a disappointing earnings report from the Nippon Yusen shipping company added to the bearish sentiment (NYSEARCA:EWJ).
The euro declined against dollar by 0.38% trading at $1.3134 (NYSEARCA:FXE).
June futures for Brent Crude Oil declined by 3 cents to $118.73/bbl. (NYSEARCA:USO).
June gold futures declined by $13.00 to $1629.00 per ounce (NYSEARCA:GLD).
As of 10:00 EDT, the Euro STOXX 50 Index declined by 2.87% to 2,245 (NYSEARCA:VGK). The FTSE 100 fell by 2.03% to 5,655 (NYSEARCA:EWU). The German DAX Index swooned by 3.29% to 6,528 (NYSEARCA:EWG).
In the United States, the S&P 500 was down by 1.29% to 1,360 at 10:30 EDT. The Dow lost 164 points (1.26%) to hit 12,865. The Nasdaq Composite declined by 1.44% to 2,957.
ETF Summary:
iShares Dow Jones US Industrial Sector Index Fund (NYSEARCA:IYJ) -1.53% as disappointing reports on the global economy feed bearish sentiment.
iShares FTSI/Xinhua China 25 Index Fund (NYSEARCA:FXI) -3.29% as a result of China’s lackluster Purchasing Managers’ Index for April, signaling economic contraction.
SPDR Euro STOXX 50 ETF (NYSEARCA:FEZ) -3.43% following the Eurozone’s decline in manufacturing and the unrelenting sovereign debt crisis.
CurrencyShares Europe Trust ETF (NYSEARCA:FXE) -0.71% as the euro declines against the dollar.
SPDR S&P 500 INDEX ETF (NYSEARCA:SPY) -1.24% following a string of downbeat reports from around the world.
Bottom line: Monday’s disappointing economic news from around the world puts American investors in a “risk off” posture.
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