Friday, August 21, 2015

Markets slump on weak China data and lower oil prices

Dow sank another 214, decliners over advancers more than 4-1 & NAZ sold off 78.  The MLP index lost 3+ to the 348s & the REIT index fell 1+ to 319.  Junk bond funds drifted lower & Treasuries went higher.  Oil is below 41, see below, while oil hardly budged. 

AMJ (Alerian MLP Index tracking fund)

CLV15.NYM....Crude Oil Oct 15...41.08 Down ...0.24  (0.6%)

GCQ15.CMX...Gold Aug 15.....1,155.60 Up ...2.60 (0.2%)

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China stock markets tanked more than 4% on Fri, taking weekly losses for the main indices to nearly 12% & casting doubt over China's ability to prevent another bout of panic selling as the market neared collapse again.  The latest tumble followed similar declines in global markets & reflected sharp across-the-board falls in China as bears claimed victory over bulls on the settlement day for Aug index futures contracts.  The plunge on Fri may also have been exacerbated by a private survey showing Chinese factory activity shrinking in Aug at the fastest pace in nearly 6½ years.  Investors also pointed to signs that regulators' commitment to pushing up the market has weakened.  On Aug 14, the China Securities Regulatory Commission (CSRC) said it would allow market forces to play a greater role, while keeping state investors involved to maintain stability.  On Fri, the CSI300 index in Shanghai & Shenzhen fell 4.6%, to 3589, bringing the week's loss to 11.9%, the worst performance since mid-Jun.  The CSI300 has given up all the gains it made since mid-Mar.  The Shanghai Composite Index lost 4.2%, to 3507.  For the week, that index tumbled 11.5%, the sharpest drop since the week ending Jul 3, & near the low it hit on Jul 9 during the height of the recent market rout.  Investors remain anxious after a surprise decision on Aug 11 by the central bank to sharply devalue the yuan.

China Stocks Have Worst Week Since June

US oil prices headed for their 8th consecutive week of falls on Fri, the longest losing streak since 1986, after a sharp drop in Chinese manufacturing increased worries over the health of the world's biggest energy consumer.  Activity in China's factory sector shrank at its fastest pace in almost 6½ years in Aug as domestic & export demand dwindled, adding to worries about lower consumption of crude in the economy.  US crude hit a low of $40.65, down 67¢, before rallying modestly.  Brent oil was on track for its 7th weekly decline in 8, down 50½ at $46.12.  Both global oil benchmarks are near 6½-year lows, with US crude heading for its longest weekly losing streak in 29 years.  In late 1985, oil prices slumped to $10 from around $30 over 5 months as OPEC raised output to regain market share following an increase in non-OPEC production.  US crude inventories continued to rise last week, as imports rose & shale production fell more slowly than anticipated, despite dropping prices.

U.S. Oil Fall Longest in 29 Years

Deere reported fiscal Q3 profit tumbled 40% on weak demand for agricultural equipment, overall lower shipment volumes & a stronger dollar, & gave a bleaker forecast for Q4 sales.  "John Deere’s third-quarter results reflected the continuing impact of the downturn in the farm economy as well as lower demand for construction equipment," CEO Samuel R. Allen said.  Farm & turf equipment sales, which account for more than 2/3 of total revenue, fell 24% to $5.31B.  Sales in the construction & forestry segment decreased 13% to $1.53B.  EPS fell to 1.53 from 2.33 a year earlier.  Total revenue declined 20% to $7.59B.  The company said equipment sales are projected to decrease about 21% for fiscal 2015, revised down from 19% forecast in the previous qtr.  Its Q4 equipment sales projection was also revised down to 24% lower, from 17% lower.  The stock dropped 6.58 (7%).  If you would like to learn more about DE, click on this link:

Deere Profit Falls on Weak Demand for Farm Equipment

Deere (DE)

Dow is down an amazing 700 this week, one of its worst weeks in history!  There was no major news, just an accumulation of dreary news on the global economy combined with prospects for the first hike by the Fed in years.  China is getting a lot of attention with the devaluation of its currency & additional weak economic data.  Europe stumbles along & prospects for the Greek bailout are fuzzy.  US economic data is nothing to write home about.  The stock market remains on defense with more selling, at a minimum, before Labor Day.

Dow Jones Industrials

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