Japanese stock market crashed as annual gains were erased

Downward stock market trend in Europe continued last week

Stock market in Europe traded in a mixed environment during the working week ended October 17, as concerns over possible recession in the Eurozone negatively weighted on equity markets. Inflation in the single currency area remained at the 0.3% level in September, far below the ECB target of below but close to 2%. Consumer price index in Britain, however, decreased further to 1.2% in the last month. Therefore, market concerns about potential rate hikes of the Bank of England are most likely to be removed from the agenda in the nearest future, as the CPI target for the U.K. is also located at 2% mark.

The benchmark Eurostoxx 600 Index lost 0.9% to 318.68 points on Friday’s evening. While the decline during the previous week was less pronounced than some time before, some sectors of the gauge managed to gain very good value. Automobiles & parts and travel & leisure industries rose 3.9% and 2.1%, respectively, being in the top of the leaders’ table. At the same time, banking and health care sectors dropped 2.5% and 2.4%, accordingly. Royal Imtech NV continued to plummet for the second consecutive week after a considerable increase in share price on October 9. Last week, it slipped as much as 70.9% to trade at 0.026 euros per one unit of share on Friday. Shire Plc, a global biopharmaceutical company, plunged 27.6% to push the health care sector deeper into the red zone. Its share price reached 47.35 euros in the end of the trading week.

Among other market indicators, British FTSE 100 went down 0.9% to 6,310.29 points, while German DAX managed to gain 0.4% to close at the 8,850.27 mark back on Friday.

U.S. stocks rebounded slightly during October 13-17 week

Among all major stock markets around the world, only the American one was able to advance on all fronts during the October 13-17 working week, even though an increase was just slight, compared to considerable fall of the weeks before. While US core retail sales were published worse than expected, federal budget balance improved in September better than predicted. Therefore, the 2013-14 financial year in the country was closed with a deficit of 2.8% of GDP, less than 4.1% during the previous year. Moreover, the shortfall dropped below the average level over 40 years of 3.1%. Additionally, unemployment claims continued to decrease, while industrial production jumped in September.

The main S&P 500 gauge climbed 0.6% to 1,886.76 points from Monday to Friday, as all but three industries rose in value. Industrials and basic materials increased the most by 3.9% and 3.4%, respectively. Cliffs Natural Resources rebounded 19.4% to $8.74 per share and reached the highest level since beginning of this month. CSX Corp, a transportation company, followed with a surge of 13.1% to $33.86, as its profit for the third quarter exceed both forecasts and results for Q3 2013. On the other hand, Netflix Inc. dropped 21% to $357.09, capping overall advance of the consumer discretionary sector. Recently, a streaming media provider announced that price increases pushed the pace of growth in number of clients down.

Meanwhile, the Dow Jones Industrial Average added 0.4% to 16,380.41 points, while NASDAQ jumped 1.1% to close at 4,258.43 points on Friday.

Japanese stock market crashed as annual gains were erased

Japanese equity market experienced a considerable slump in value on economic concerns all over the world. Both major stock indexes of the country reached their lowest points in more than five months. Last time, Japanese market dropped by such a big amount, when the Fed announced a start of tapering, while last week the volatility was uplifted due to worries that the Federal Reserve will begin raising rates soon. Moreover, economists are pointing on sluggish growth prospects in the Eurozone, as it may fall back into recession in the third quarter amid negative effect of Russian sanctions. Additionally, some analysts have questions about strength of the US economy, even though recent statistical data confirmed positive perspectives for this country.

The Topix Index, one of two largest stock market indicators in Japan, slipped as much as 9.2% last week to reach the 1,177.22 mark. As a result, gains for last 12 months were erased, as the index is now 1.6% below the levels of October 2013. All the sectors experienced a negative trend, while mining and nonferrous metals lost the most, 11.4% and 11.2%, respectively. Among market movers, Excel Co Ltd dropped 47.2% to 1,118 yen per share, while Tosho Printing Co Ltd lost 26.6% to 356 yen. On the other hand, Airtech Japan Ltd surged 72.8% during five trading days to hit the price of 1,258 yen on Friday, as Ebola treatment-related issues attracted purchasing of the air-cleaner’s stock on worries over spread of the disease.

At the same time, Nikkei 225 Index plummeted 8.6% to close at 14,532.52 points on Friday at market closing time.

Asia-Pacific equities mixed as Australian market surged

Share markets in the Asia-Pacific region were swinging between gains and losses during October 13-17 time period. However, some markets managed to increase in value during the week, as Australian companies jumped the most, compared to other global markets. Among important fundamentals from the region, Chinese inflation decreased to 1.6% in September, down from 2% a month ago and less than predicted by analysts. On the other hand, China registered a rise in amount of new loans issued. Concerning Australia and New Zealand, their markets were mostly driven by news from abroad, namely the US and Europe.

The benchmark S&P/ASX200 Index added 2.3% to 5,271.70 points last week, as all the industries included in the gauge posted a positive movement. Taking into account high level of importance of mining companies in Australia, they were positively influenced by optimistic growth outlook in the US and rebound in China, as it may increase demand for raw materials. Companies of this sector, in turn, added 1.8% over the week, while telecommunications and financials leaded gains with a 2.6% advance for both sectors. Among best performers, Lynas Corp Ltd, a minerals-mining company, climbed 13% to A$0.087 per share. It was followed by companies of the same industry, Coalspur Mines Ltd and St Barbara Ltd, as they gained 12% and 11.5%, respectively. Among biggest losers, however, Mirabela Nickel Ltd dropped 35.1% to A$0.037.

In addition, Hang Seng Index lost 0.5% to 23,023.21 points last week, as NZX 50 gauge of New Zealand slipped 0.45% to close at 5,146.94 points on Friday.

EXPLANATIONS

Indexes

• Standard & Poor's 500 Index (S&P 500) or (SPX) - U.S. stock market index consisting of the 500 large-cap shares widely traded on the New York Stock Exchange and the NASDAQ.

• Dow Jones Industrial Average Index (INDU) - U.S. stock market index consisting of the 30 large publicly owned U.S. companies , primarily industrials

• NASDAQ Composite Index - U.S. stock market index representing all the stocks that are traded on the Nasdaq stock market, mostly technology and Internet-related

• New Zealand Exchange 50 Gross Index (NZX 50) - stock market index consisting of the top 50 companies listed on the New Zealand Stock exchange

• S&P/ASX 200 - a market-capitalization weighted stock market index of stocks listed on the Australian Securities Exchange from Standard and Poor’s

• Hang Seng Index (HI) - Hong Kong’s stock market index consisting of 48 largest companies listed on the Hong Kong Exchange

• Japan’s Nikkei Stock Average (Nikkei 225 Index) or (NKY) - Japanese stock market index consisting of the 225 largest companies listed on Tokyo Stock Exchange

• FTSE 100 Index (UKX) - U.K. stock market index consisting of the 100 most capitalized U.K. companies trading on the London Stock Exchange

• DAX Index (DAX) - German stock market index consisting of the 30 largest and most liquid German companies trading on the Frankfurt Stock Exchange

• Eurostoxx 600 - stock market index, derived from the Stoxx Europe Total Market Index, consisting of 600 large, mid– and small-sized companies from 18 European countries

Chart

• Correlation - statistical measure of the linear relationship between two random variables. It is defined as the covariance divided by the standard deviation of two variables.

• Historical price changes - chart reflecting the historical price changes of particular region’s stock indices

Indicators

• Industry performance - weekly performance of industries within the particular stock market index

• Top performers - companies within a particular stock market index showing the best or worst weekly performance

• Performance - relative historical change of stock market index value