While you were sleeping: Metals drag equities lower
Sept. 23 (BusinessDesk) - US Treasuries rose along with bonds in Europe, while equities on both sides of the Atlantic
fell with commodity prices, amid concern about the outlook for the global economy.
Commodities including copper and zinc dropped, reflecting intensifying worries about the slowing pace of China’s
economic growth. Oil also slid, amid bets Iran is moving closer to exporting crude into an already flooded global
Wall Street moved lower as investors opted for the perceived safety of US Treasuries. In New York trading at about 3pm,
the Dow Jones industrial average dropped 1.50 percent, the Standard & Poor’s 500 Index shed 1.52 percent, while the Nasdaq Composite Index sank 1.85 percent.
Slides in shares of United Technologies and those of Goldman Sachs, last down 3.9 percent and 2.3 percent respectively,
led the drop in the Dow. Goldman fell on news that CEO Lloyd Blankfein has cancer, though he said it is a curable form.
US Treasuries advanced, pushing yields on 10-year notes eight basis points lower to 2.12 percent, while yields on
30-year note fell nine basis points to 2.93 percent.
“It’s being led by the long end of the curve, which is a function of lower energy prices and the implications for the
inflation outlook there,” Ian Lyngen, a government-bond strategist at CRT Capital Group in Stamford, Connecticut, told
Bloomberg. “It’s a classic flight to quality that’s benefited the long end of the curve and, in doing so, hasn’t really
changed anyone’s macro outlook or expectations for the pace of policy.”
Investors will scrutinise a speech by US Federal Reserve Chair Janet Yellen on Thursday. US policy makers kept their
target rate steady last week, fuelling concern that the economic outlook, both at home and abroad, is not as solid as
"The potential that the Fed may delay rate hikes until next year will provide even more angst for the markets ... the
longer the delay, the greater the potential for an accelerating rate hike schedule,” Tom Stringfellow, chief investment
officer at Frost Investment Advisors, told Reuters.
In Europe, the Stoxx 600 Index ended the day with a 3.1 percent tumble from the previous close. The UK’s FTSE 100 Index
dropped 2.8 percent, France’s CAC 40 Index retreated 3.4 percent, while Germany’s DAX Index sank 3.8 percent.
Shares of Glencore plunged 11 percent in London, as stocks of mining companies around the world weakened along with the
view on the outlook for commodity prices.
Shares of Volkswagen plummeted 20 percent, following Monday’s 19 percent tumble, after the company said about 11 million
of its diesel-powered cars have “the relevant engine management software” that effectively allows them to cheat on
“Discrepancies relate to vehicles with Type EA 189 engines, involving some eleven million vehicles worldwide,” the
company said in a statement. “A noticeable deviation between bench test results and actual road use was established
solely for this type of engine. Volkswagen is working intensely to eliminate these deviations through technical
Volkswagen is facing billions of dollars of fines. The company also said it plans to set aside a provision of about 6.5
billion euros in the third quarter of the current fiscal year.