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World stocks decline as lower oil prices hit commodity shares

World stocks decline as lower oil prices hit commodity shares
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First Published: Thu, Sep 24 2009. 10 57 PM IST

Looking down: The New York Stock Exchange in New York City, US. The declines came after the US Federal Reserve kept interest rates unchanged at a regular meeting on Wednesday. Chris Hondros/Getty Imag
Looking down: The New York Stock Exchange in New York City, US. The declines came after the US Federal Reserve kept interest rates unchanged at a regular meeting on Wednesday. Chris Hondros/Getty Imag
Updated: Thu, Sep 24 2009. 10 57 PM IST
London: World stock markets fell on Thursday as investors took profit from recent rises and energy stocks were hit by a big drop in oil prices.
In afternoon trading in Europe, Germany’s DAX was down 0.3% to 5,688.33 points, Britain’s FTSE 100 lost 0.3% to 5,125.55 points, and France’s CAC 40 dropped 0.5% to 3,804.15 points.
Stock futures pointed to a lower opening on Wall Street. Dow Jones industrial average futures shed 0.1% to 9,703 points, and Standard and Poor’s 500 futures slipped 0.1% to 1,057.60 points.
Looking down: The New York Stock Exchange in New York City, US. The declines came after the US Federal Reserve kept interest rates unchanged at a regular meeting on Wednesday. Chris Hondros/Getty Images/AFP
In Asia, Hong Kong’s Hang Seng index was the biggest loser, falling 544.79 points, or 2.5%, to 21,050.73. South Korea’s Kospi declined 17.59, or 1%, to 1,693.88.
The declines came after the US Federal Reserve kept interest rates unchanged at a regular meeting on Wednesday, as widely expected, and said the pace of economic activity has improved since August.
On Thursday, investors will get more clues on how the US economy is faring when data on jobs and housing is published. They will also be keeping an eye on the Group of Twenty (G-20) meeting of the world’s leading economies on Thursday and Friday in Pittsburgh.
In Europe and Asia, lower oil prices weighed on energy stocks. The price of crude fell nearly 4% on Wednesday on an unexpected jump in US inventories that suggested consumer demand remains weak. Benchmark crude for November delivery was down 58 cents at $68.39 (around Rs3,290) in European trade on Thursday.
“That’s taking a shine off indexes but I think that’s very short-term,” said Jane Coffey, head of equities at Royal London Asset Management. “The market’s really waiting to see what’s going to come out of the G-20. We’re in a bit of a waiting mode rather than moving forward or having any worries about going backwards.”
Profit-taking among short-term investors was also playing a role in market movements and is “a stark reminder that sunny optimism can last for only so long without faltering, especially in the midst of a global downturn,” said Anthony Grech, market strategist at IG Index. Most Asian markets lost ground, including Australia’s benchmark, down 0.7%, as lower oil prices hit commodity stocks. Markets in the Philippines, New Zealand and Singapore also fell but China’s Shanghai index gained 0.4%.
The declines came after the US Federal Reserve said it would again slow some of its purchases of mortgage-backed securities, which have been part of the extraordinary support the central bank has given the US economy over the past year. Investors have focused on when central bankers and governments will begin to unwind some of the measures they have taken to boost the global economy since the onset of the global financial crisis one year ago.
“I think people get scared when the central bankers talk about the withdrawal from the market,” said Francis Lun, general manager at Fulbright Securities Ltd in Hong Kong. “I think investors got coddled by the government for too long.”
Japan’s Nikkei 225 stock average, closed for the first three days of this week due to a string of national holidays, was Asia’s bright spot, gaining 173.68, or 1.7%, to 10,544.22 points. In Tokyo trade, ailing Japan Airlines Corp. dived 15.8% as its president met with officials to appeal for taxpayer funds to keep the carrier flying.
Struggling Japanese consumer finance company Aiful Corp. plunged 23.9% after forecasting an annual loss and saying it will cut 2,000 jobs, or about 44% of its workers.
Kelly Olsen in Seoul and Shino Yuasa in Tokyo contributed to this story.
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First Published: Thu, Sep 24 2009. 10 57 PM IST