Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

While you were sleeping: Political risks hit sentiment

While you were sleeping: Political risks hit sentiment

Feb 5 (BusinessDesk) – Stocks on both sides of the Atlantic dropped as concern about Europe's political and financial instability returned, and Wall Street's five-year highs left investors with vertigo in the absence of signs to justify current valuations.

The latest American economic report also disappointed.

Orders to US factories advanced 1.8 percent in December after a revised 0.3 percent slide the prior month, according to Commerce Department data. The gain though fell short of estimates of analysts polled by both Bloomberg News and Reuters, which had predicted increases of 2.3 percent and 2.2 percent respectively.

That report put a damper on enthusiasm stemming from Friday in the US when a slew of data seemed to point to a strengthening recovery.

In afternoon trading in New York, the Dow Jones Industrial Average dropped 0.90 percent, while the Standard & Poor's 500 Index shed 0.91 percent, and the Nasdaq Composite Index declined 1.26 percent.

Shares of Wal-Mart Stores slid, last 1.6 percent lower at US$69.37 after earlier falling as low US$69.13, after JPMorgan Chase reduced its rating on the stock.

Shares of Oracle dropped, last 2.4 percent lower, after the company agreed to buy Acme Packet for about US$2.1 billion. Acme Packet shares soared, climbing 22 percent.

Shares of Herbalife also sank, last down 3.7 percent, after The New York Post reported the company is facing an investigation by the Federal Trade Commission.

In Europe, the Stoxx 600 Index ended the day with a 1.5 percent slide from the previous close. Benchmark stock indexes also dropped in London, Frankfurt and Paris. German stocks were hurt after the nation's second biggest bank, Commerzbank, posted a wider than expected quarterly loss and warned of more trouble ahead.

Spain’s IBEX 35 plunged 3.8 percent amid calls for Prime Minister Mariano Rajoy to resign amid fury over reports of corruption involving the ruling party. Rajoy has denied allegations.

Spanish bonds dropped, sending the nation's 10-year yield up 23 basis points to 5.44 percent.

"The prospect of Rajoy's resignation has roiled the markets," Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York, told Reuters.

"Any fresh political instability in (the) euro zone's most important periphery economy could undermine the sense of investor confidence and send Spanish yields higher, making it much more difficult for the government to implement its austerity measures."

Italy, meanwhile, is plagued by concern about the increasing popularity of Silvio Berlusconi as the nation heads to the polls in three weeks. A potential election victory for the former premier could curb efforts to reform the country's finances.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

By May 2018: Wider, Earlier Microbead Ban

The sale and manufacture of wash-off products containing plastic microbeads will be banned in New Zealand earlier than previously expected, Associate Environment Minister Scott Simpson announced today. More>>

ALSO:

Snail-ier Mail: NZ Post To Ditch FastPost

New Zealand Post customers will see a change to how they can send priority mail from 1 January 2018. The FastPost service will no longer be available from this date. More>>

ALSO:

Property Institute: English Backs Of Debt To Income Plan

Property Institute of New Zealand Chief Executive Ashley Church is applauding today’s decision, by Prime Minister Bill English, to take Debt-to-income ratios off the table as a tool available to the Reserve Bank. More>>

ALSO:

Divesting: NZ Super Fund Shifts Passive Equities To Low-Carbon

The NZ$35 billion NZ Super Fund’s NZ$14 billion global passive equity portfolio, 40% of the overall Fund, is now low-carbon, the Guardians of New Zealand Superannuation announced today. More>>

ALSO:

Split Decision - Appeal Planned: EPA Allows Taranaki Bight Seabed Mine

The Decision-making Committee, appointed by the Board of the Environmental Protection Authority to decide a marine consent application by Trans-Tasman Resources Ltd, has granted consent, subject to conditions, for the company to mine iron sands off the South Taranaki Bight. More>>

ALSO: