Japanese stocks plunged the most in two decades as a drop in U.S.
retail sales pointed to a deepening recession and Prime Minister Taro
Aso reinforced concern a bank bailout will fail to stem a rout in
global markets.
Honda Motor Co., which gets more than half its
profit from North America, sank 10 percent, while Nintendo Co. tumbled
by its daily limit in Osaka after retail receipts in the U.S. fell for
a third month. JFE Holdings Inc., Japan's second-biggest steelmaker,
declined 15 percent after UBS AG cut its price estimate by 64 percent.
Oil explorer Inpex Corp. lost 14 percent, the most on record, after
crude slid to the lowest in a year.
Toyota Motor Corp., Japan's
biggest automaker, slumped 9.3 percent to 3,310 yen. Nintendo, which
generates 90 percent of its revenue outside of Japan, retreated 10
percent to 34,550 yen on the Osaka Securities Exchange, and Sony Corp.,
the world's second-biggest maker of consumer electronics, dived 13
percent to 2,320 yen.
JFE plunged 15 percent to 2,075 yen, while
Nippon Steel Corp., the world's second-biggest maker of the alloy, fell
9.4 percent to 300 yen. Kobe Steel Ltd. slid 9.4 percent to 154 yen.
UBS lowered its investment ratings on the steelmakers to ``neutral''
from ``buy'' and cut 12-month price estimates on the companies, with
JFE's reduced to 2,600 yen from 7,200 yen.
The Nikkei 225 Stock
Average declined 1,089.02, or 11 percent, to close at 8,458.45 in
Tokyo, the second-steepest plunge in its 59-year history. The broader
Topix index fell 90.99, or 9.5 percent, to 864.52. Both gauges sank the
most since October 1987. The Osaka Securities Exchange temporarily
halted trading in Nikkei futures after a plunge in shares triggered a
circuit breaker.
Sales at U.S. retailers fell 1.2 percent in
September, the most since August 2005 and extending a drop to a third
month, the first time that's happened since 1992. That coincided with
the Federal Reserve's release of its Beige Book report, which said
economic activities weakened last month throughout the country.
European
stocks fell, driving the Dow Jones Stoxx 600 Index to its biggest
two-day drop since 1987, on growing concern bank bailout plans in the
U.S. and Europe will fail to avert a global recession.
Rio Tinto
Group and Vedanta Resources Plc tumbled more than 13 percent after a
report showed U.S. industrial production fell in September by the most
in almost 34 years. Total SA, Europe's third-biggest oil company, slid
9.2 percent as oil dropped below $70 a barrel. Barclays Plc and ING
Groep NV sank more than 11 percent after Citigroup Inc. said loss rates
on credit cards and mortgages may climb to records.
Vedanta Resources Plc, India's largest copper producer, sank 15 percent to 632.5 pence.
Copper
futures for December delivery fell 4.55 cents, or 2.1 percent, to
$2.165 a pound on the Comex division of the New York Mercantile
Exchange. Earlier, the metal touched $2.0405, the lowest since Jan. 6,
2006.
U.S. production at factories, mines and utilities fell 2.8
percent last month, more than the 0.8 decrease predicted by economists.
For the third quarter, output fell at an annual rate of 6 percent, the
biggest decline since 1991.
Total lost 9.2 percent to 33.20 euros. Royal Dutch Shell Plc, Europe's biggest oil producer, fell 7.2 percent to 1,294 pence.
Crude
oil for November delivery sank as much as $5.97, or 8 percent, to
$68.57 a barrel on the New York Mercantile Exchange. It reached a
record $147.27 on July 11.
Stocks swung widely Thursday, as the Dow was down almost 380 points
at its session low, but was able to complete a near 800 point swing to
close 400 points higher with a 4.7% gain. It finished at its high.
The session's gains were broad based, but the financial sector was a general laggard. It closed 1.7% higher.
Swiss banking giant UBS (UBS 17.33, +0.67) showed relative strength
after the Swiss government said it will inject the equivalent of
roughly $5 billion into the firm and the Swiss central bank will
purchase nearly $60 billion worth of toxic assets. The moves mirror
those made by governments and central banks across the globe to restore
the financial system and credit markets.
Further reflecting the difficult conditions facing financial firms,
Citigroup (C 15.90, -0.33) and Merrill Lynch (MER 18.35, +0.11) both
posted losses for the latest quarter. The losses stem largely from
asset write-downs and other impairment charges.
Outside the financial sector, the global leader in handset sales, Nokia
(NOK 15.54, +0.43), met earnings expectations, as did health insurer
UnitedHealth (UNH 22.63, +0.96). Conglomerate United Technologies (UTX
52.88, +3.63) topped earnings expectations with its results.
Airlines fared extremely well, Southwest Airlines (LUV 12.49, +0.93)
and Continental Airlines (CAL 15.75, +2.91) both announced
better-than-expected third quarter earnings per share results, helping
lift the Amex Airline Index 21%. Meanwhile, competitors UAL (UAUA
10.30, +2.59) and US Airways (LCC 6.78, +1.49) rode the tailwind of
their peers. Their gains helped the Russell 2000 advance 6.9%.
Lower oil prices also bode well for airlines. During the session, oil
futures fell below $70 per barrel for a time, but settled closer to $72
per barrel. Concerns of a global slowdown continue to cut the price of
the commodity, as did today's word that crude inventories grew by 5.61
million barrels. Analysts expected a build less than half that.
Despite oil's slide, the energy sector made the strongest gains,
advancing 7.8% on strength in oil and gas exploration and production
companies (+12.1%). The sector's advance comes in stark contrast to its
15.5% dive in the prior session.
In economic news, filings for jobless benefits declined 16,000 to
461,000, which was below the consensus 470,000 claims. The four-week
moving average ticked up to 483,250 from 482,500 and leaves things on
track for a 10th consecutive month of nonfarm payroll declines.
Industrial production for September decreased 2.8%, which is worse than
the 0.8% downturn that was anticipated. It was the largest decline
since 1974, but excluding extraordinary happenings (hurricanes and a
strike at Boeing) industrial production would have been positive.
The core rate for CPI dropped to 0.1% in September and will probably
stay at that level, or even drop to zero for the next few months. Total
CPI was flat and may well be flat to down for several more months given
the drop in energy prices.