The stock markets in the United States tumble primarily due to investors’ concern that the ongoing selloff of Chinese equities could damage the economic growth of China. Investors are also worried about the debt crisis in Greece.
Today, the China Securities Regulatory Commission prohibited major shareholders, corporate executives and directors from selling their stakes in listed companies for six months. This is the latest initiative of the Chinese government to stop the stock market rout.
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Foreign investors are exiting their stockholdings in China after the Chinese government stepped up its stock market intervention. The Chinese government recently suspended initial public offerings and enlisted major brokerages to buy shares worth at least $19.62 billion.
Commenting on China’s latest move, Mark Mobius, chairman of Templeton Emerging Markets Group told Bloomberg, “It suggests desperation. It actually creates more fear because it shows that they’ve lost control.”
Meanwhile, the Federal Reserve Open Markets Committee (FOMC) released the minutes of its June 16-17 meeting indicating that policy makers want to “see more evidence that economic growth was sufficiently strong” before starting raising interest rates.
Some policymakers expressed concerns regarding Greece’s debt crisis and the pace of economic growth outside the United States particularly China and other emerging markets.
“The minutes portrayed a Fed that was cautious and wanted to see more evidence before it hiked interest rates. Some of their key concerns were the U.S. consumer, but also events abroad,” said Paul Eitelman, investment strategist at Russell Investments in Seattle. “
The International Monetary Fund (IMF) once again urged the Federal Reserve to delay raising interest rates until the first half of 2016. The international creditor said the central bank should wait until it “sees greater signs of wage or price inflation.”
• Dow Jones Industrial Average (DJIA) – 17,516.35 (1.47%)
• S&P 500- 2,046.81 (-1.66%)
• NASDAQ- 4,909.76 (-1.75%)
• Russell 2000- 1,228.04 (-1.60%)
• EURO STOXX 50 Price EUR- 3,327.50 (+1.01%)
• FTSE 100 Index- 6,490.70 (+0.91%)
• Deutsche Borse AG German Stock Index DAX- 10,747.30 (+0.66%)
• Nikkei 225- 19,737.64 (-3.14%)
• Hong Kong Hang Seng Index- 23,516.56 (-5.84%)
• Shanghai Shenzhen CSI 300 Index- 3,663.04 (-6.75%)
Stocks in Focus
The stock price of Alcoa tumbled more than 5% to $10.50 per share after reporting earnings that missed the consensus estimate of Wall Street analysts. The company’s earnings excluding one-time items were $0.19 per share compared with the $0.22 per share expected by analysts.
The stock price of Enphase Energy declined more than 18% to $6.20 per share, the biggest decliner among the companies listed on NASDAQ. The company hit its lowest level at $6.15 per share today. Enphase Energy lost more than 56% of stock value year-to-date.
The stock value of Sony declined almost 5% to $26.81 per share. Hiroki Totoki, president and CEO of Sony’s smartphone division said the company has no intention to exit its mobile business. He said the company remained committed to producing smartphones for the masses.