Vedanta drops 13 percent on 100

| September 22, 2011
Vedanta drops 13 percent on 100

European equities markets were significantly lower Thursday on a statement from the US Federal Reserve that said there are “significant downside risks” to the growth of the US economy and after Moody’s Investors Service downgraded the credit ratings of three US-based banks, including Bank of America (NYSE: BAC), Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC), citing the possibility that the US government could allow a big bank to fail in the future.

The FTSE 100 was down 4.67 percent to 5,041.61 in London, while the FTSE 250 dropped 3.68 percent to 9,888.26.

There were no gainers on the 100, while all five decliners on the index were from the mining sector, where there were also no gains on the possibility that manufacturing in China could contract for a third consecutive month after a preliminary purchasing managers’ report for September was at 49.4 for September after coming in at 49.90 in August, with any reading below 50 signaling contraction.

Vedanta Resources (LSE: VED) was the biggest decliner on the 100 and in the mining sector as it dropped 13.28 percent, followed on the 100 by Antofagasta (LSE: ANTO) with a decline of 12.7 percent while Kazakhmys (LSE: KAZ) was down 12.37 percent, Fresnillo (LSE: FRES) was 11.68 percent lower and Rio Tinto dropped 10.8 percent.

Things were no better for miners over on the 250, where four of the five biggest decliners came from the mining sector, with iron-ore miner Ferrexpo (LSE: FXPO) dropped 12.43 percent, while Aquarius Platinum (LSE: AQP) was down 11.79 percent, Petropavlovsk (LSE: POG) was 11.03 percent lower and Gem Diamonds declined by 9.32 percent.

There were some gainers on the 250, however, with easyJet (LSE: EZJ) leading gains as the air carrier added 8.97 percent after it said it will pay a 9p per share dividend after it raised its annual profit outlook.

The energy sector was all lower, with Essar Energy (LSE: ESSR) worst off as it dropped 8.32 percent as all sector constituents dropped more than 3 percent and all but four were down more than 4 percent.

Banks were lower in London and around the region, with Lloyds Banking Group (LSE: LLOY) down 10.09 percent, followed by a 9.4 percent decline for Barclays (LSE: BARC) and Standard Charatered (LSE: STAN) was down the least as it dropped 4.17 percent.

Over on the CAC-40 in Paris, Societe Generale (Euronext: GLE) was down 9.57 percent for the worst performance on that index, followed by a 9.49 percent for decline for Credit Agricole (Euronext: ACA) while Natixis (Euronext: KN), while Deutsche Bank (FWB: DBK) was down 8.39 percent on the Dax in Germany.

The FTSE Eurofirst 300 was down 4.58 percent to 876.01 while the IBEX fell 4.62 percent to 7,830.8, the Dax was 4.96 percent lower to 5,164.21m and the CAC-40 dropped 5.25 percent to 2,781.68, with no gainers on either the IBEX, the Dax or the CAC-40.

Markets in Asia and the Pacific region were lower after the statement from the US Federal Reserve and as investors were not pleased with the Fed’s plan to buy $400 billion worth of longer-term debt, believing that it will not be enough help to the US economy.

The Nikkei 225 was down 2.07 percent to 8,560.26 in Tokyo, while the Topix index was 1.66 percent lower to 744.54 and the Mothers market dropped 3.76 percent to 390.09, with banks down as the Fed specifically mentioned strains in global financial markets as one of the risks to US economic growth. and after the Moody’s downgrades of the credit ratings on some US-based banks.

In issuing the downgrades on the banks, Moody’s cited an increased chance that the US government could allow a big bank to fail.

Mitsubishi UFJ (TYO: 8306) was down 1.5 percent while Mizuho Financial Group (TYO: 8411) and Sumitomo Mitsui Financial Group (TYO: 8316) each dropped 1.8 percent.

Carmakers were also lower, with Toyota Motor (TYO: 7203) down 1.7 percent while Honda Motor (TYO: 7267) was 3.9 percent lower.

Elsewhere in the region, the Straits Times Index was down 2.55 percent to 2,720.53 in Singapore, Australia’s markets were lower as the Sydney Ordinaries dropped 2.62 percent to 4,044.7 and the S&P/ASX200 fell 2.63 percent to 3,964.9, the Shanghai Composite was 2.78 percent lower to 2,443.06 in China, South Korea’s Kospi was down 2.9 percent to 1,800.55, the Taiex fell 3.06 percent to 7,305.5 in Taiwan, India’s Sensex was 4.13 percent lower to 16,361.2 and the Hang Seng dropped 4.85 percent to 17,911.9 in Hong Kong.

New York equities markets were also much lower, with the Dow Jones Industrial Average down 3.63 percent to 10,721 at just past 12:30 p.m. local time, while the S&P 500 had dropped 3.24 percent to 1,128.99 and the Nasdaq Composite was 3.06 percent lower to 2,460.45.

Crude oil prices fell significantly as the US dollar strengthened and investors sold off holdings to make up for losses elsewhere as global equities plummeted, with November contracts for West Texas Intermediate crude down $4.92 to $81 per barrel on the New York Mercantile Exchange while Brent crude was last reported to have dropped $4.43 to $105.93 per barrel on the ICE Futures Europe exchange in London.

Precious metals prices were also lower in New York trade as gold dropped $64.20 to $1,743.90 per troy ounce while silver was down $3.47 to $37 per troy ounce.

Among base metals, copper was down 29 cents to $3.47 per pound in New York trade while three-month contracts for copper dropped $626 to $7,674 per tonne on the London Metal Exchange on the indications that manufacturing has contracted this month in China, while factory activity also declined in September in the Eurozone.

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