Japan stocks plunged, driving the Topix index down more than 7
percent for the fourth time in two weeks, on concern the slowing global
economy will weigh on profits and as the tumbling euro cut the value of
European sales.
Mitsubishi UFJ Financial Group Inc., Japan's
largest listed bank, sank 8.8 percent on a report the lender's
six-month earnings probably dropped by half. NEC Electronics Corp.
tumbled by a record 20 percent after reversing its forecast to a loss.
The
Nikkei 225 Stock Average dropped 631.56, or 6.8 percent, to close at
8,674.69 in Tokyo, its first retreat since Oct. 16. The broader Topix
fell 67.41, or 7.1 percent, to 889.23. The benchmarks widened their
losses in the afternoon as the yen extended its gain against the euro
and dollar.
First-half profit at Mitsubishi UFJ will likely drop
about 50 percent because of an increase in bad-loan costs and
writedowns on shareholdings, the Nikkei newspaper said today. Rivals
Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc.
may post earnings that are lower than their estimates, Nikkei said.
Mitsubishi
UFJ fell 8.8 percent to 774 yen, while closest rival Mizuho dived 8.5
percent to 334,000 yen. Sumitomo Mitsui, Japan's third-biggest listed
bank by assets, dropped 8 percent to 505,000 yen. Banks contributed the
most to the Topix's decline, followed by electronics makers.
Sony,
the world's largest maker of home video-game consoles, lost 9.3 percent
to 2,450 yen. Endoscope maker Olympus Corp., which counts Europe as its
biggest overseas market, stumbled 11 percent to 2,135 yen.
NEC Electronics, the nation's third-biggest chipmaker, plunged 20
percent to 1,210 yen, the steepest drop since it listed on the bourse
in July 2003. The company yesterday said it will probably have a net
loss of 8 billion yen in the year to March 31 because demand for
semiconductors slumped. The company had previously forecast it would
break even this year.
NEC Corp., the parent of the chipmaker,
tumbled 11 percent to 330 yen, while Advantest Corp., the world's
biggest maker of memory-chip testers, plunged 11 percent to 1,338 yen.
European
stocks fell for a second day, led by banks and commodity producers, on
concern the global economic slump will snuff out profit growth.
National
benchmark indexes fell in all 18 western European markets except for
Iceland. The U.K.'s FTSE 100 retreated 4.5 percent, as did Germany's
DAX. France's CAC 40 sank 5.1 percent, with Schneider Electric SA
dropping 8.2 percent as sales slowed in Asia.
Royal Bank of
Scotland, Britain's second-largest bank, slid 14 percent to 68.3 pence.
Barclays Plc, the U.K.'s second- biggest, dropped 7.4 percent to 224.5
pence. Prudential Plc, an insurer, slipped 4.5 percent to 333 pence.
The
U.K. currency fell to $1.6260, the lowest level since September 2003.
The yield on the two-year gilt dropped 7 basis points to 3.37 percent.
Bank
of England policy makers voted unanimously to lower the benchmark rate
by the most since 2001 in an emergency meeting this month, minutes from
the meeting showed.
The cost of protecting European corporate
bonds from default rose today, according to traders of credit-default
swaps. Contracts on the Markit iTraxx Crossover Index of 50 companies
with mostly high-risk, high-yield credit ratings increased 20 basis
points to 790 after opening at a record 795, according to JPMorgan
Chase & Co.
BHP Billiton slid 9 percent to 880 pence as it
said ``uncertainty'' will persist in China after the economy grew at
its slowest pace in five years last quarter.
Anglo American Plc, the world's fourth-biggest diversified mining company, lost 8.1 percent to 1,275 pence.
Copper
fell for a third straight day in London as a slowdown in world economic
growth reduces demand. Copper slipped 6.6 percent to $4,200 a metric
ton in London.
Total dropped 6.2 percent to 36.86 euros. Crude for
December delivery declined as much as $4.13, or 5.7 percent, to $68.05
a barrel in New York. It reached a record $147.27 on July 11.
Oerlikon
tumbled 18 percent to 95.55 francs after reporting a fall in nine-month
sales of 7.4 percent to 3.77 billion francs ($3.24 billion) as Asian
investment in textile equipment waned. This fell short of the 3.83
billion francs from five analysts surveyed by Bloomberg.
Global economic concerns and worries over corporate earnings sank stocks for the second straight session.
The
S&P 500 spent the entire session in negative territory, falling
6.1% to its lowest closing level in five years. Weakness was
broad-based with 478 of the S&P 500 components posting a loss,
although volume was on the light side when considering the scope of
this session's move.
Similar to Tuesday, the majority of companies
(56%) reported better-than-expected earnings for the latest quarter,
but outlooks were negative. Of the companies that issued earnings
guidance with their quarterly reports, 39% were negative, 29% were
in-line, 24% were mixed and only 7% were positive.
A few of the more
widely-held names that topped earnings estimates include Apple (+5.08),
McDonald's (-0.67), Merck (-6.51) and Phillip Morris International
(-1.22). Of note, Merck plans to cut 7,200 jobs, or 13% of its
workforce.
Yahoo! (+0.32) reported a profit drop that met estimates, and said it plans to lay off 1,500, or 10% of its workforce.
AT&T (-1.80) and Boeing (-3.37) are two of the bigger names that missed earnings estimates.
All ten of the economic sectors posted a loss, ranging from -10.4% (energy) and -3.8% (consumer staples).
A
sharp drop in crude prices in conjunction with disappointing earnings
from ConocoPhillips (-4.90) and Baker Hughes (-8.52) caused a 10.4%
decline in energy stocks.
On related note, the material sector fell 8.3% as copper prices plunged 9.7%.
The defensive-oriented consumer staples sector outperformed on a relative basis with a decline of 3.8%.
The
dollar rallied for the third straight session, with today's gains
fueled by weakness in overseas markets and Bank of England Governor
King saying that a U.K. recession seems likely. The DJ World Index
excluding U.S. dropped 6.8%.
The strength in the dollar and global
economic fears sparked a broad-based sell-off in commodities (-4.5%).
Crude oil prices plunged 7.4% to $66.84, with selling interest
compounded by the fourth straight weekly increase in inventory levels.
As
stocks and commodities faltered, the long end of the Treasury curve
rallied as investors sought safety. The benchmark 10-year note climbed
more than a point to push its yield down to 3.60%.