Home' Trinidad and Tobago Guardian : December 13th 2015 Contents DECEMBER 13 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG9
Aslump in oil prices sparked
a global sell-off in financial
markets on Friday with loss-
es spreading from Asia to
Europe to the US, where
stocks fell sharply to cap
their worst week since the summer.
The selling was broad, with all 10 sectors
of the Standard and Poor s 500 index ending
down. Fearful investors put their money in
government bonds, especially US Treasurys.
Another measure of fear in the markets, the
so-called Vix index, jumped and is now up
70 per cent in just five days.
Investors worry the sharp fall in the price
of oil and other commodities is a sign of weak-
ness in the global economy, especially China,
and that will cut into profits at big energy
companies and suppliers of raw materials as
well as other companies.
"We re stockpiling commodities and demand
is not picking up," said Tim Courtney, chief
investment officer of Exencial Wealth Advisors.
"It s kind of a depressing market."
Energy shares, already decimated this year,
fell 3.4 per cent on Friday. Southwestern Energy
plunged 14 per cent. Freeport McMoRan, a
mining giant, dropped 6 per cent.
The trouble began with a report from the
International Energy Agency that said the
oversupply in oil would persist until late next
year even as demand continues to weaken.
Benchmark US crude plunged US$1.14, or 3.0
per cent, to close at US$35.62 a barrel in New
York. It has been falling for 1 ½ years and is
now at its lowest level since early 2009.
By the end of the day, the Standard & Poor s
500 index lost 39.86 points, or 1.9 per cent,
to 2,012.37. It was down 3.8 per cent for the
week, its worst showing since August.
The Dow Jones industrial average lost 309.54
points, or 1.8 per cent, to 17,265.21. The Nasdaq
composite declined 111.71 points, or 2.2 per
cent, to 4,933.47.
In Europe, Germany s DAX lost 2.4 per cent,
Britain s FTSE 100 dropped 2.2 per cent and
France s CAC 40 shed 1.8 per cent.
Investors were also rattled by trouble in a
risky corner of the credit markets where bonds
from heavily indebted companies are traded.
Their prices have fallen sharply as investors
fear the companies that issued the bonds might
default. A fund that tracks the bonds, the
iShares iBoxx USD High Yield Corporate Bond
ETF, dropped nearly four per cent in five days.
Investors were also focused on a Federal
Reserve meeting next week where the central
bank is widely expected to announce an
increase in its benchmark interest rate from
a record low.
Recent economic reports indicate that the
US economy is healthy enough to withstand
a rate hike, but investors are still nervous
because it would be the first rate rise in nearly
"It s anticipation of the Fed, it s oil, it s credit
... all of these factors are putting fear and con-
fusion into the investor," said Jonathan D. Cor-
pina, senior managing partner at Meridian
In a sign of trouble among commodity pro-
ducers, Dow Chemical and DuPont on Friday
announced a US$130 billion deal to merge
their businesses to counter falling prices. Their
stocks had risen in previous days on reports
the deal was forthcoming, but fell sharply on
Dow Chemical dropped US$1.54, or nearly
three per cent, to US$53.37. DuPont lost
US$4.11, or 5.5 per cent, to US$70.44.
In Asia, Japan s Nikkei 225 index climbed
one per cent, but most other major indexes
fell. Hong Kong s Hang Seng dropped 1.1 per
cent and mainland China s Shanghai Com-
posite lost 0.6 per cent.
Among stocks making big moves:
• Software maker Adobe Systems rose
US$2.46, or 2.8 per cent, to US$91.42 after
reporting earnings in its latest quarter that
exceeded analysts expectations. The stock is
up 26 per cent since the start of the year.
• Corning rose 99 cents, or 5.6 per cent,
to US$18.68 after the company said it will give
up its stake in Dow Corning, a joint venture
with Dow Chemical. Instead it will invest in
a semiconductor business that is owned by
US government bond prices rose sharply.
The yield on the 10-year Treasury note fell to
2.12 per cent from 2.23 per cent late Thursday,
a big move. The dollar fell to 120.79 yen from
121.64 yen. The euro strengthened to
US$1.0995 from US$1.0939.
Precious and industrial metals futures closed
mixed. Gold edged up US$3.70 to US$1,075.70
an ounce, silver fell 23 cents to US$13.88 an
ounce and copper rose four cents to US$2.12
In other energy futures market, Brent crude,
the international oil benchmark, fell US$1.80,
or 4.5 per cent, to US$37.93 a barrel in London.
In New York, heating oil plunged eight cents,
or 6.5 per cent, to US$1.146 a gallon, wholesale
gasoline was little changed at US$1.282 a gallon,
and natural gas lost 2.5 cents, or 1.2 per cent,
to US$1.99 per 1,000 cubic feet. AP
Japanese stocks rose as the yen weakened but other
Asian benchmarks were mostly lower as investors
hunkered down ahead of the Fed s key meeting next
week on interest rates.
KEEPING SCORE: Japan s benchmark Nikkei 225
index jumped 1 per cent to 19,235.30 after the yen
failed to hold on to gains from the day before. A
weaker currency makes Japan s electronics and cars
cheaper for overseas customers. South Korea s Kospi
lost 0.3 per cent to 1,946.58. Hong Kong s Hang Seng
slipped 0.6 per cent to 21,570.59 and mainland China s
Shanghai Composite Index lost 0.8 per cent to 3,426.12.
Australia s S&P/ASX 200 dipped 0.2 per cent to
5,026.30. Benchmarks in Taiwan and Southeast Asia
also lost ground.
CHINA DATA: Markets are also cautious ahead
of a batch of monthly economic data expected on
Saturday, including retail sales, fixed asset investment
and industrial production. Further out, a report on
foreign direct investment in China is due on Wednes-
day. The latest figures will provide an update on the
world s second biggest economy, which is struggling
with a stubborn downturn.
QUOTE-WORTHY: "There is tentative hope that
Asia-Pacific stock markets will end the week on a
high note after the strong US session overnight,"
Angus Nicholson of IG wrote in a commentary. "The
lead up to a likely rate rise by the Fed has caused con-
sternation in markets and last minute positioning,
especially from the People s Bank of China."
ENERGY: The price of US benchmark crude fell
further, sinking 30 cents to US$36.47 a barrel in elec-
tronic trading on the New York Mercantile Exchange.
The contract fell 40 cents, or 1 per cent, to settle at
US$36.76 a barrel on Thursday, its lowest level since
early 2009. Brent crude, the international benchmark,
fell 31 cents to US$39.82 a barrel in London.
CURRENCIES: The dollar rose to 122.06 yen from
121.94 yen. The euro fell to US$1.0933 from US$1.0937.
Asian shares slip as Fed nears, Japan up on yen weakness
A slump in
crude oil prices
US stock market
How the Dow Jones industrial
average fared on Friday
The Dow Jones industrial average lost
309.54 points, or 1.8 per cent, to
The Standard & Poor's 500 index lost
39.86 points, or 1.9 per cent, to 2,012.37.
The Nasdaq composite declined 111.71
points, or 2.2 per cent, to 4,933.47.
For the week:
The Dow fell 582.42 points, or 3.3 per
The S&P 500 fell 79.32 points, or 3.8 per
The Nasdaq dropped 208.80 points, or 4.1
For the year:
The Dow is down 557.86 points, or 3.1 per
The S&P is down 46.53 points, or 2.3 per
The Nasdaq is up 197.41 points, or 4.2 per
Specialist Meric Greenbaum works at his post on the floor of the New York Stock Exchange,
Friday, December 11, 2015. Stocks are sharply lower in midday trading, led by more declines in
energy and materials stocks as prices for oil and other commodities slide. AP
People walk past an electronic stock board of a securities firm in Tokyo Friday,
December 11, 2015. Japanese stocks rose as the yen weakened but other Asian
benchmarks were mostly lower as investors hunkered down ahead of the Fed's
key meeting next week on interest rates.
Links Archive December 12th 2015 December 14th 2015 Navigation Previous Page Next Page