Markets far from merry as stock losses extend to 8th straight day

Dollar weakens on govt shutdown concerns, weaker stocks

NEW YORK, Dec 24, (Agencies): A gauge of stocks worldwide hurtled toward an eighth straight decline on Monday as investors ignored the US Treasury secretary’s actions to reinforce confidence in the economy and President Donald Trump criticized the Federal Reserve as “the only problem our economy has.”

Investors, also facing the likelihood of a prolonged US government shutdown, fled to the relative safety of bonds and gold during the first day of a week of trading shortened by the Christmas holiday, even after Trump’s Treasury secretary responded to an ongoing selloff by calling top US bankers on Sunday and making plans to convene a group of officials known as the “Plunge Protection Team.”

MSCI’s world equity index, which tracks shares in 47 countries, was 0.59 percent lower and down almost 7 percent over the past eight sessions. The index touched its lowest since early 2017.

US stocks have fallen sharply in recent weeks on concerns over slowing economic growth and efforts by the US Federal Reserve to tighten monetary policy, with the S&P 500 index on pace for its biggest percentage decline in December since the Great Depression. The Nasdaq has fallen nearly 22 percent from its Aug. 29 high.

Trump on Monday blasted America’s independent central bank saying the Fed is the country’s only economic problem. It “does not have a feel for the market,” he tweeted.

US stocks followed broad indexes in Europe and Asia lower on Monday morning, with markets in Germany and Italy closed and trading volumes small.

The Dow Jones Industrial Average fell 421.72 points, or 1.88 percent, to 22,023.65, the S&P 500 lost 37.78 points, or 1.56 percent, to 2,378.84 and the Nasdaq Composite dropped 50.76 points, or 0.80 percent, to 6,282.23.

The flight to safe havens again boosted the yen, with the dollar hitting its lowest levels against the Japanese currency since August. The yen last strengthened 0.66 percent versus the greenback to 110.50 per dollar.

Gold too has regained its appeal, holding near six-month highs over $1,266 per ounce.

Oil prices were near their lowest since the third quarter of 2017, having shed 11 percent last week. US crude futures were last at $44.61 per barrel.

US stocks fell sharply in early trading Monday, extending losses for the market after its worst week in more than seven years.

Technology companies, health care stocks and banks took some of the heaviest losses in the broad sell-off, which followed news that the US Treasury Secretary called the CEOs of six major banks Sunday in an apparent attempt to stabilize jittery markets.

Trading volume was light during a shortened trading session ahead of the Christmas holiday Tuesday.

The S&P 500 index fell 48 points, or 2 percent, to 2,368 as of 10:09 a.m. Eastern Time. The Dow Jones Industrial Average lost 444 points, or 2 percent, to 22,000. The Nasdaq skidded 110 points, or 1.7 percent, to 6,222. The Russell 2000 index of smaller-company stocks gave up 14 points, or 1.1 percent, 1,277.

The major indexes are down 16 to 26 percent from their autumn highs. Barring huge gains during the upcoming holiday period, this will be the worst December for stocks since 1931.

Coming off a turbulent week of trading on Wall Street, Treasury Secretary Steven Mnuchin on Sunday disclosed calls with the heads of Bank of America, Citigroup, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo. Mnuchin said the CEOs all assured him they have ample money to finance their normal operations, even though there haven’t been any serious liquidity concerns rattling the market. But the calls added to the underlying worries that have gripped markets of late.

Bank stocks were among then biggest decliners Monday. Citigroup slid 2.6 percent to $48.97.

Technology and health care stocks accounted for much of the selling. Microsoft fell 3.1 percent to $95.18. Cigna lost 2.5 percent to $176.80.

The decline in oil prices weighed on energy stocks. Hess slumped 6.9 percent to $38.61.

Bond prices rose. The yield on the 10year Treasury note fell to 2.76 percent from 2.79 percent late Friday.

The dollar fell to 110.39 yen from 111.31 yen on Friday. The euro strengthened to $1.1429 from $1.1370.

European markets were mostly lower in light trading on Monday as a partial US government shutdown stemmed holiday cheer. France’s CAC 40 dropped 0.9 percent to 4,653.55. Britain’s FTSE 100 index, which will close early on Christmas Eve, was 0.8 percent lower at 6,666.25. Markets in Germany, Italy and Brazil were closed. Wall street was poised for a higher open after ending its worst week in more than seven years. Dow futures added 0.6 percent to 22,534.00 and the broad S&P 500 futures rose 0.7 percent to 2,430.00. Major US indexes, which slumped on Friday, have tumbled more than 12 percent in December.

The FTSE 100 was down 0.5 percent and the mid-cap index was 0.8 percent lower, setting a bleak tone for a holidayshortened week.

Weakness in the dollar weighed on companies with a greater international presence, making them the biggest drags on Britain’s main index. HSBC slipped 1.1 percent, while GlaxoSmithKline was 1 percent lower.

Diageo, the world’s biggest drinks marker, and consumer goods giant Unilever were down by around 1 percent, while tobacco firms Imperial Brands and British American Tobacco fell 2 percent and 0.6 percent, respectively.

Investors came back to oil stocks following sessions of steep losses in crude prices that hit oil companies. Shell and BP managed slight gains as oil prices rose on signs the price fall may start crimping supply from the United States.

British indexes are on track for their worst yearly performance since the 2008 financial crisis, as jittery investors dumped shares amid concerns over Brexit, a slowdown in global economy, plunging oil prices and a trade spat between Washington and Beijing.

Britain’s mid-cap index, which is more exposed to the outcomes of Brexit, has lost more than 16 percent in the year-to-date and is a little over 1 percent away from confirming a bear market with a 20 percent drop since its peak close in June.

Among the few news-driven moves, mid-cap gambling software company Playtech gave up 7 percent, after earlier hitting its lowest in over six years, as it flagged that a change in Italian gambling tax law would hit its 2019 core earnings.

Gambling companies GVC, Paddy Power Betfair and William Hill also fell between 0.6 percent and 2.1 percent.

Shares in London Stock Exchange were among the top losers on the main index with a 3.9 percent dip after exchanges group Euronext announced plans to buy the owner of the Oslo stock exchange for 625 million euros.

Asian stocks are mixed with light trading on Monday as a Wall Street slump and a partial US government shutdown stemmed holiday cheer.

South Korea’s Kospi dropped 0.3 percent to 2,055.78 while the Shanghai Composite index was less than 0.1 percent higher at 2,516.84. Hong Kong’s Hang Seng lost 0.4 percent to 25,651.38. Australia’s S&P ASX 200 added 0.5 percent to 5,493.80. Stocks fell in Taiwan and Singapore but rose in Thailand. Markets in Japan, Indonesia and the Philippines were closed.

Oil prices dropped on Monday, nearing their lowest level this year, in line with another decline across global stock markets, which came under pressure from concern about a US government shutdown and a worsening world economy.

The price of oil has already fallen by more than 30 percent so far this quarter to its lowest since the third quarter of 2017, as investors have grown increasingly wary of the impact to global growth, and crude demand, from an escalating trade dispute between the United States and China.

The US Senate has been unable to break an impasse over US President Donald Trump’s demand for more funds for a wall on the border with Mexico, and a senior official said the shutdown could continue until Jan 3.

Investors have flocked to perceived safe-haven assets such as gold and government debt, at the expense of crude oil and stocks.

Brent crude futures were down 58 cents at $53.24 a barrel by 1450 GMT, having fallen from a session high of $54.66, while US crude futures fell 90 cents to trade at $44.69.

Brent fell 11 percent last week and hit its lowest since September 2017, while US futures slid to their lowest since July 2017, bringing the decline in the two contracts to 35 percent so far this quarter.

“Today is going to be a market of very thin liquidity and we don’t have strong convictions in such market conditions. Brent has managed to break 55.00 $/bbl at the end of last week, the short-term momentum is negative,” Petromatrix strategist Olivier Jakob said.

The macroeconomic picture and its impact on oil demand continue to pressure prices. Global equities have fallen nearly 9.5 percent so far in December, their biggest one-month slide since September 2011, when the euro zone debt crisis was unfolding.

The trade dispute between the United States and China and the prospect of a rapid rise in US interest rates have brought global stocks down from this year’s record highs and ignited concern that oil demand will be insufficient to soak up any excess supply.

The Organization of the Petroleum Exporting Countries and allies led by Russia agreed this month to cut oil production by 1.2 million barrels per day from January.

Should that fail to balance the market, OPEC and its allies will hold an extraordinary meeting, United Arab Emirates Energy Minister Suhail al-Mazrouei said on Sunday.

The US dollar slipped against the euro and Japanese yen on Monday as concerns about the possibility of a prolonged government shutdown and weak equity markets reduced demand for the greenback. The dollar index against a basket of six major currencies dipped 0.39 percent to 96.577. It has fallen from a one-and-a-half-year high of 97.711 on Dec 14. US Treasury Secretary Steven Mnuchin said on Sunday that he had held a series of phone conversations with the heads ofthe six largest US banks in an apparent attempt to soothe nervous investors. “The CEOs confirmed that they have ample liquidity available for lending,” the Treasury Department said. Mnuchin “also confirmed that they have not experienced any clearance or margin issues and that the markets continue to function properly,” the Department said. “Mnuchin attempted some damage control,” Win Thin, global head of currency strategy at Brown Brothers Harriman, said in a note, adding that the move could backfire. “Yes, markets have been worried about recession and Fed policy mistakes.