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Global Markets Plummet Amidst Economic Concerns

Strategic Insights

— 2 min read

U.S. stocks ended mixed on Monday, with energy shares declining on lower oil prices, as investors remained cautious ahead of the unofficial start of first-quarter earnings season. Despite this, some corporate news lifted shares, such as Tyco International gaining 3.33 percent after news of a potential takeover offer. Global markets continued to decline on Tuesday, with European and Asian markets falling due to concerns over the Japan nuclear crisis and a lower oil price outlook.

Key Takeaways:

  • Energy shares declined on Monday due to lower oil prices, with Occidental Petroleum Corp. (NYSE:OXY) shares plummeting 3.18 percent and Anadarko Petroleum Corp. (NYSE:APC) slumping at least 4.25 percent.
  • The International Monetary Fund (IMF) released a report forecasting global economic growth to slow to 4.4 percent in 2011 from 5.0 percent in 2010, citing rising commodities prices as a risk to global growth.
  • The IMF also forecasted 2011 U.S. growth to be 2.8 percent, citing the budget deficit as a risk to U.S. growth.
  • Level 3 Communications, Inc. (NASDAQ:LVLT) advanced 18.06 percent after agreeing to buy Global Crossing for $23.04 per Global Crossing common or preferred share, or about $3.0 billion, including the assumption of about $1.1 billion of net debt as of Dec. 31, 2010.
  • European stock markets fell in early trade on Tuesday as concerns over the Japan nuclear crisis weighed on sentiment, with the Stoxx Europe 600 Index declining 1.08 percent to 277.96.
  • Asian stock markets ended lower on Tuesday, led by declines from commodities after the IMF cut its outlook for the US economy, with the benchmark Nikkeideclining 1.69 percent or 164.44 points to 9,555.26.
  • The Japan nuclear agency has raised the severity level of the crisis at a stricken nuclear plant to rank it on par with the 1986 Chernobyl disaster.

Statistics:

  • The S&P 500 Index was down 3.71 points, or 0.28 percent, at 1,324.46.
  • The Dow Jones Industrial Average was up 1.06 points, or 0.01 percent, at 12,381.11.
  • Crude oil futures gained 0.18 percent to $110.12 a barrel, but fell to $109.88 a barrel after the IMF cut its outlook for global economic growth.
  • The IMF forecasted world economic growth at 4.4 percent this year, down from five percent last year.
  • The IMF forecasted the US economy to expand by just 2.8 percent in 2011, compared to its previous forecast of three percent.

Sources:

  • "U.S. Stocks End Mixed; Energy Shares Decline" (Bloomberg)
  • "IMF Cuts US Growth Forecast" (BBC)
  • "Japan Nuclear Agency Raises Severity Level of Crisis" (Reuters)
  • "Global Crossing Shares Leap as Level 3 Communications Buys Out" (CNBC)
  • "Euro Zone Industrial Output Plunges" (Bloomberg)

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