This morning saw an end to days of optimism on world markets as currency problems plagued Japan, and Europe’s output came in lower than expected. Federal Reserve worries also picked up this morning as problems in Syria fade. The Federal Reserve will start its September meeting next Tuesday, September 17, and investors are worried the central bank will cut its quantitative easing program.
The big movers in premarket trading included Apple Inc. (NASDAQ:AAPL), Yahoo! Inc. (NASDAQ:YHOO), Advanced Micro Devices Inc. (NYSE:AMD), CF Industries Holdings, Inc. (NYSE:CF), Carnival Corporation (NYSE:CCL), Marathon Petroleum Corp (NYSE:MPC), Qualcomm Inc (NASDAQ:QCOM), Newmont Mining Corp (NYSE:NEM), and Diamond Offshore Drilling Inc (NYSE:DO).
Michele Ragazzi's Giano Capital returned 1.9% for March, taking the fund's year-to-date performance to 1.7%. Since its inception, Ragazzi's flagship fund has produced a compound annual return of 7.8%. According to a copy of the €10 million fund's March update, a copy of which ValueWalk has been able to review, Giano's most significant investment at Read More
On Wednesday the S&P 500 closed at 1,689.13, the Dow Jones Industrial Average closed at 15,326.60 and the Nasdaq closed at 3,725.01. The market was slightly optimistic before the market opened this morning, but with Federal Reserve worries continuing, it’s difficult to tell if that will last.
On international equity markets, the Nikkei fell this morning to 14,387.27 on news that Japan’s currency had strengthened, the FTSE 100 was pretty flat at 6,592.70, Euro Stoxx 50 was flat at 2,864.27, the Hang Seng was up a little at 22,953.72, and the Shanghai made gains to 2,255.60.
On the Brent exchange oil was trading up by 0.61% this morning to 112.18 per barrel while gold fell by more than 2% to -2.23% per ounce. The US Dollar was worth a fraction less this morning. One Dollar traded for 0.7523 Euro, 0.6329 British Pounds, and 99.450 Japanese Yen.
Futures were up in the Nasdaq and the Dow Jones, but the S&P 500 betrayed the positive outlook for the market. Nasdaq Futures were up 0.16% and Dow Jones Industrial Average Futures were up 0.04%. Meanwhile futures in the S&P 500 lost 0.08%, a drop of 1.4 points.
Market and economic news
European output was down by more than analysts had expected in July. Eurostat published a report this morning on output in the economic bloc in that month. The report showed that activity had slowed by 1.5% in July, compared with output levels in June. The consensus estimate for output was a decline of 0.3% in July. The massive overshoot has sparked new worries about the future of the European economy.
The fall puts the decline for 2013 so far to 2.1%, compared to the 0.4% recorded in June. The biggest worry for investors in the report was the face that German output fell 2.3%. The country is the engine of the continent. If its economy begins to decline, there will be huge trouble on all Euro markets.
Syrian crisis talk erupted again this morning despite moves toward a peace agreement between the great powers. France has warned that the United States would be foolish to accept any deal and expect the Syrian government to actually hold up its end of the bargain. It appears that there will be some sort of peaceful resolution between the United States and Syria, brokered by Russia, but the markets are still worried that talks might break down.
Federal Reserve policy is bound to dominate the headlines as we head toward the bank’s next major meeting next Tuesday. Traders are worried of the effect that might be brought to bear on markets if the central bank decides to reduce quantitative easing this month. The Federal Reserve has give no real indication of its plans, but until the bank decides to end easing, the market will likely suffer heading into each monthly meeting.
Stocks in focus
The Blackstone Group L.P. Inc. (NYSE:BX) announced this morning that it plans to make its Hilton Hotels public. The company filed for a public offering worth $1.25 billion this morning. It is unclear yet when the IPO will take place, but it is sure to be a big deal once the date and price are announced.
Yahoo! Inc. (NASDAQ:YHOO) revealed this morning that the company now has 800 million users around the world. CEO Marissa Meyer said that the number was up 20% since she started at Yahoo! Inc. (NASDAQ:YHOO). The new numbers don’t include users from Yahoo’s acquisition Tumblr, making the number even more impressive.
Dell Inc. (NASDAQ:DELL): Today is finally the day. Dell Inc. (NASDAQ:DELL) shareholders will vote on Michael Dell’s plan to take the company private at a meeting today. The privatization is one of the most highly anticipated deals of the year, and the result of the meeting will make interesting reading.