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Wednesday, August 3, 2016

World Stocks Drop For Third Day On Growing Concerns About Central Bank Policy, Tumbling Oil

After 7 consecutive drops in the Dow Jones, the Industrial average is set for an 8th decline with US equity futures modestly lower as risk-averse sentiment persists overnight, after U.S. stocks saw their biggest drop in four weeks amid a selloff in equities from Japan to Europe. Oil’s continued slide and recent plunge into a bear market, despite some stabilization this morning just south of $40, has finally rekindled global growth concerns, and is keeping a lid on bullishness. European stocks are little changed, while Asian stocks and S&P futures fall.
S&P 500 futures were 0.2% lower even with European equities little changed as HSBC Holdings Plc, Europe’s biggest bank, jumped after announcing a share buyback. Crude halted a two-day drop before an update on U.S. oil inventories, while gold was near its highest price since July 11. Industrial metals declined and the Malaysian ringgit and Turkish lira were some of the biggest losers among developing nations’ currencies.
"Investors are slowly realizing that with every spin of the central bank policy chamber the magazine is getting emptier," said Michael Hewson, chief market analyst at CMC Markets in London. "The larger concern here given recent market reaction to policy moves by central bankers is that policymakers are losing the confidence of investors," he said.
World stocks fell for a third straight day on Wednesday, depressed by growing nervousness surrounding central bank policy and the recent spike in world bond yields, amd the MSCI's global share index fell 0.5%, for its third straight decline, a run not seen since early June. Japan's Nikkei fell 1.9 percent on ongoing fears the BOJ is no longer on the side of the market and a lower yen.
European bank shares rebounded after two major earnings reports. Shares in European banks HSBC and Societe Generale rose as much as 5% after reporting second quarter earnings, a glimmer of light for the region's financials amid the recent gloom. HSBC reported earnings that missed expectations, however the bank rose rose the most since April after it announced a $2.5 billion stock buyback for this year and said it plans more share repurchases while keeping its dividend at the current level for the foreseeable future.

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