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US consumer confidence report drags on stocks

US consumer confidence report drags on stocks

European and U.S. markets shed earlier gains Tuesday after a report showed U.S. consumer confidence fell unexpectedly in October, stoking worries over household spending in the world's largest economy.
In afternoon European trading, Germany's DAX lost 0.4 percent to 5,618.92, France's CAC 40 slipped 0.2 percent to 3,736.53, while Britain's FTSE 100 kept afloat, rising 0.2 percent to 5,199.88.
In the first hour of trading, the Dow Jones industrial average index inched up 0.1 percent to 9,874.31, while the Standard & Poor's 500 index was 0.1 lower at 1,065.97.
Earlier, major Asian markets dropped by around 2 percent or more, with shares in resource companies hit after a steep fall in commodity prices.
European markets had risen in morning trading, driven by oil stocks after BP's third-quarter results beat analysts' expectations, while Wall Street opened solidly higher after a new report showed home prices rose in August.
But those gains were reversed as soon as a private research group reported that U.S. consumer confidence fell in October as job prospects remained bleak, fueling speculation that an already gloomy holiday shopping forecast could worsen. The Conference Board's Consumer Confidence Index fell to 47.7 in October, well below a forecast of 53.1. A reading above 90 means the economy is on solid footing.
Consumer spending is considered vital to a recovery because it accounts for more than two thirds of the U.S. economy.
In positive news, the Standard & Poor's/Case-Shiller home price index, which measures housing prices in 20 U.S. major metropolitan markets, rose 1 percent in August from July, marking the third straight monthly improvement. A housing market recovery is also considered important to a recovery as the collapse of that market helped drive the country into recession.
Meanwhile, in London, BP PLC gained 3.8 percent after it reported a 34 percent fall in third-quarter profit to $5.3 billion, as oil and gas prices fell from record levels a year earlier.
The figure from Europe's second-largest oil company compared with an $8 billion profit in the third quarter of 2008, but was up from $4.4 billion in the second quarter and well ahead of analysts' forecasts.
"The fall in earnings was well trailed, but the numbers nonetheless have obliterated market forecasts, as evidenced by the spike in the share price," said Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers.
Other oil stocks Total and Shell added 2.1 percent and 1.5 percent, partially offsetting weakness in financials.
In Asia, investors unloaded shares on worries they are overvalued. Some analysts said the markets, up massively since March, could get more choppy even if they continued to advance.
"The market has gotten high enough, so there's some profit taking right now," said Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong. "The summer rally seems to be over, and I think we're facing a cold winter."
In Japan, the benchmark Nikkei 225 stock index lost 1.5 percent to 10,212.46 points. Hong Kong's market, which was closed Monday, dropped 1.9 percent to 22,169.59.
China's Shanghai market led Asia's declines, tumbling 2.8 percent to 3,021.46. Australia's market lost 1.6 percent and India's Sensex was 2 percent lower.
South Korea's Kospi shed 0.5 percent to 1,649.53 a day after new figures showed the country's economy, Asia's fourth largest, expanded at its quickest pace in seven years in the last quarter.
Oil prices stayed around $79 a barrel in Europe after three days of losses as investors eyed a volatile U.S. dollar. Benchmark crude for December delivery rose 31 cents to $78.99; the contract fell $1.82 overnight.
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AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.


Updated : 2021-06-19 21:12 GMT+08:00