U.S. STOCKS, BONDS
U.S. stocks snapped a four-day streak of gains as concerns about steel demand weighed on materials shares and a late selloff in crude oil dented the energy sector.
Gold futures slumped to a six-week low Friday, as concerns about Europe pushed investors to the U.S. dollar at the expense of precious metals. The most-actively traded contract, for December delivery, fell $20.70, or 1.2%, to settle at $1,724 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest price since Sept. 6.
The Dow Jones Industrial Average declined 40.27 points, or 0.3%, to 13553.10. The blue-chip benchmark had rallied to its highest closing level since December 2007 last week after Federal Reserve Chairman Ben Bernanke announced an open-ended bond-buying program meant to spur the economy.
The Standard & Poor's 500-stock index gave up 4.58 points, or 0.3%, to 1461.19. The Nasdaq Composite Index lost 5.28 points, or 0.2%, to 3178.67. The materials sector led declines, with such shares in the S&P 500 falling 1.5%, the most in nearly a month.
J.P. Morgan analysts downgraded several steel-related stocks to "neutral" from "overweight," saying weak steel demand undercuts the shares' prospects. Among those downgraded were coal and iron-ore producer Cliffs Natural Resources, which fell 7% and U.S. Steel, which dropped 4.7%.
Meanwhile, Swedish steel company SSAB warned weak demand would hurt its third-quarter earnings. Its shares fell 6.9% in Stockholm.
Energy shares extended losses after a late-afternoon plunge in oil prices. Chevron dropped 0.1%, reversing earlier gains after the oil selloff.
Crude oil prices fell $2.38, or 2.4%, to settle at $96.62 a barrel. The New York Federal Reserve Bank's Empire State business conditions index for September fell from a month earlier.
Economists had expected the result to improve. In corporate news, Apple rose 1.2% after AT&T said sales of the new iPhone 5 set a record over the weekend.
Apple appeared to sell out its initial inventory of the new smartphone just an hour after accepting preorders. AT&T ticked up 0.9%. Office Depot rallied 5.3% after Starboard Value LP disclosed a 13.3% stake in the office-products retailer, which makes the activist investment firm the company's largest holder.
Starboard said Office Depot's management can cut expenses and take other measures to improve profitability. General Electric slipped 0.3% after the National Transportation Safety Board issued "urgent safety recommendations" on GE engines that have been used on Boeing jets. Boeing dropped 1.9%.
EUROPEAN STOCK MARKETS
European stocks retreated from a Federal Reserve-inspired 15-month high on Monday, led lower by losses for mining and telecom sectors.
Shares in steelmaker SSAB AB tanked after a profit warning and H&M Hennes & Mauritz AB fell on weak sales numbers. The Stoxx Europe 600 index lost 0.3% to close at 275.01.
Among notable movers in the pan-European index, fashion retailer Hennes & Mauritz gave up 1.6% as it reported lower-than-expected sales figures for August and the third fiscal quarter, hit by a stronger Swedish krona.
Also in Sweden, SSAB tumbled 6.9%, as it warned that weak demand will hit third-quarter earnings. The steelmaker now expects an operating loss for the third quarter of about 700 million kronor ($106.7 million).
The announcement weighed on other players in the sector, with Salzgitter AG off 4.7% and ThyssenKrupp AG down 4.5%. ThyssenKrupp was also downgraded to sell from neutral by UBS.
The German DAX 30 index lost 0.1% to 7,403.69. In France, steel company ArcelorMittal slid 4%, weighing on the CAC 40 index, which dropped 0.8% to 3,553.69.
Oil group Total SA slipped 1%. Vivendi SA gave up 1.9% after UBS cut the stock to sell from neutral. Elsewhere, Spanish and Portuguese stocks were under pressure, on the back of antiausterity rallies over the weekend.
Portugal's PSI 10 index slumped 0.7% to 5,399.50. Spain's IBEX 35 index dropped 0.1% to 8,148.00, with Banco de Sabadell SA down 2.7%.
The yield on Spain's 10-year government bond rose 17 basis points to 5.95%, according to electronic trading platform Tradeweb. Spain's borrowing costs continued to drop after the ECB said it was prepared buy unlimited amounts of government debt from struggling economies, but only after governments ask for a bailout and agree to abide by strict policy conditions.
Among U.K. stocks, Vodafone Group PLC fell 1.3% and weighed the most on London's benchmark index. A Vodafone spokeswoman confirmed a published report that said the wireless telecom firm will determine by November whether it needs to make a provision to cover a $2.2 billion tax bill in India.
BT Group PLC fell 2.1% as Exane BNP Paribas cut the stock to neutral from outperform. The FTSE 100 index slipped 0.4% to 5,893.52, further pressured by Royal Dutch Shell PLC, which lost 0.3%.
Heavyweight miners were also on the decline, as most metals prices dropped. Anglo American PLC gave up 2.3%, Rio Tinto PLC lost 2%, and BHP Billiton PLC fell 1.2%. Unilever PLC, however, supported the index, gaining 1% after UBS lifted the stock to buy from neutral.
ASIA-PACIFIC STOCK MARKETS
Asian stocks were mixed Monday, consolidating after posting sharp gains on Friday, while the South Korean won touched an over six-month high against the U.S. dollar.
The Federal Reserve's plan to boost the U.S. economy came one week after the European Central Bank announced measures to tackle Europe's ongoing debt crisis. Now that central bankers have made their plans public, investors are looking ahead to see whether these efforts will be reflected in the form of better economic data.
However, in the short-term the next major data point will come out of Asia. China's preliminary manufacturing data for September, due to be released on Thursday, will be used to gauge the health of the region's largest economy.
The initial boost that currencies received from the announcement of Ben Bernanke's bond-buying plan late last week faded Monday, with a number of regional pairs falling from Friday's highs.
Trade was also quiet with the Japanese market shut for a holiday. In Sydney, miners were reacting to a strong boost to commodity prices on Friday spot iron shot up by 5.7%, while copper added 3.8%.
This helped major miners Rio Tinto advanced 1.6%, and BHP Billiton was 2.5% higher. The S&P/ASX 200 was up 0.3% to 4402.50. Hong Kong's Hang Seng Index was up 0.1% to 20658.11, with local developers mixed following the Hong Kong Monetary Authority's latest round of mortgage tightening measures aimed at cooling the property market.
Henderson Land Development fell 1.4%, while Sun Hung Kai Properties climbed 0.9%. Chinese property developers saw sharp losses as investors became concerned that local governments could introduce measures to slow down the property market: China Resources Land was the Hang Seng's worse performing stock, down 3.4%.
Large developers listed in Mainland China fared badly as well, helping the Shanghai Composite slump by 2.1% to 2078.50. Poly Real Estate Group sank 6.7% and China Vanke dropped 3.4%.
Iron ore import prices for China delivery are expected to fall to an average this year of $127 a metric ton, down 11.2% from a previous forecast of $143, Standard Chartered said in a research note Monday.
Hong Kong stocks related to Japan took a beating after a series of demonstrations in China over the weekend, during which Japanese cars were smashed and Japanese businesses were attacked.
Chinese car companies that have joint ventures with Japanese companies were sold, with Dongfeng Motor Group and Guangzhou Automobile Group down 7% and 4.6% respectively. Ramen chain Ajisen (China) sank 6.7% and AEON Stores also lost 5.5%.
South Korea's Kospi Composite was off 0.3% to 2002.35 though financial stocks continued to rise following the recent easing measures introduced by global central banks. KB Financial Group added 1.7% and Hana Financial Group gained 3%. Index heavyweight Samsung Electronics retreated 1.6%.
Base metals closed little changed from earlier in the session on the London Metal Exchange Monday, mostly slightly lower amid profit-taking but still somewhat supported while opinion differed as to whether recent rallies will continue to be extended.
At the close of open-outcry trading, LME three-month copper was down 1.0% on Friday's settlement at $8,300 a metric ton. Nickel meanwhile held on to positive territory, closing 2.5% higher on Friday's close at $18,215/ton.
U.S. crude futures took a violent tumble Monday, dropping $3 in less than a minute on a huge spike in trading volume. Light, sweet crude for October delivery recently traded $3.10 lower at $95.90 a barrel on the New York Mercantile Exchange after a sharp one-minute decline.
Trading volume spiked to nearly 13,000 contracts. Brent crude on the ICE futures exchange traded 2.8% lower at $113.39 a barrel. Gold futures ended a seesawing Monday mildly in the red, breaking a two-day winning run after a strong rally last week on the Federal Reserve's latest bond-buying plan. Gold for December delivery retreated $2.10, or 0.1%, to settle at $1,770.60 an ounce on the Comex division of the New York Mercantile Exchange. COMPILED FROM MORRISON SECURITIES PTY. LTD.
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