A fourth straight down week for US shares as some bourses around the world approach the 10% correction level in the current sell-off.
The Dow industrials and the Standard & Poor’s 500 both fell on Friday, after oil giant, Chevron had warned about its quarterly results and consumer confidence fell to the lowest level since March.
The US market’s nervousness hit other markets.
Tokyo shed more than 9% in value over the week in a sell-off driven by renewed fears about earnings and whether the stuttering economy had stabilised and started growing again.
Deflation fears are gathering strength among Japanese investors and consumers.
Chevron warned that the weakness in the US dollar would more than offset any gains from rising oil prices in the June quarter.
Investors took that to mean a lower second quarter profit and immediately extrapolated that to the rest of the energy sector.
The S&P 500 has lost more than 7% from its peak in early June in the bounce that started in early March.
That puts it on the edge of a correction (a drop of at least 10% from the most recent peak) that could come this week if second quarter earnings, especially for banks and some big industrials, are not convincing.
For the week, all three major US stock indexes fell: the Dow lost 1.6%, the S&P 500 was off 1.9% and Nasdaq was down 2.3% despite an upgrade for the sector on Friday by Goldman Sachs ahead of reports from IBM, Google and Intel this week. Goldman Sachs didn’t much like IBM.
The Dow dropped 36.65 points or 0.45% on Friday, to 8,146.52. The S&P 500 fell 3.55 points, or 0.40%, to 879.13. But Nasdaq edged up 3.48 points, or 0.20%, to 1,756.03.
The Reuters/University of Michigan Surveys of Consumers’ latest reading on consumer sentiment showed it falling to its weakest level since March.
(In contrast to Australia where figures last week showed the highest level of consumer confidence in 19 months!)
The big story Friday in the US was the emergence of the new General Motors from 40 days in the bankruptcy wilderness.
Its debts have been chopped to just under $US50 billion from as much as $US176 billion at the end of December last year (including health and pension obligations, plus bonds and debts. Shareholders were wiped out).
The new GM starts is now in business with the US Government owning around 60%. The governments of Canada and Ontario hold 11.7%, unions have a stake through their pension funds and bondholders will own 10%.
In Europe shares closed lower on Friday, also racking up a fourth straight week of losses on worries about corporate earnings and the health of the rebound.
The FTSEurofirst 300 index of top European shares fell 1.1% to 814.29 points on Friday, its lowest close since April 28.
Over the week, it fell 3.4%, but is still up more than 26% from the record low it hit on March 9.
The other European index, the Stoxx 600 fell 3% and had its worst weekly decline in almost two months. The Index is now down 7.7% since its June 12 peak.
In London the Footsie 100 fell 0.8% Friday and 2.3% for the week. That was also its lowest close since late April.
In Asia, Chinese shares finished mixed ahead of the slew of economic reports this week.
The Shanghai Composite Index closed at 3,113.93 points, down 9.1 points. The Shenzhen Component Index closed at 12,706.01 points, up 68.07 points, or 0.54%.
The markets are still up by around 70% this year so far.
In Tokyo, Japan’s Nikkei had a rough week, losing heavily on fears about the economy and earnings.
The Nikkei average lost 0.04% Friday, but that was enough to give it its eighth losing day in row.
Over the week it shed 5.4%, a heavy loss and around 9.5% since the peak in mid-June.
The Nikkei is now up just 4.8% this year, compared with a 27% rise for the MSCI Asia Pacific Index and that big rise in China.
In Hong Kong the Hang Seng Index fell 0.5% Friday to 17,708.42, the lowest closing level in more than two weeks.
The Index was off 2.2% over the week, but is still up a very solid 56% since the lows of March.
In Australia shares ended the week with a small gain as investors snapped up banks and mining stocks.
Rio Tinto gained after Standard & Poor’s lifted its debt rating on the mining company and investors ignored the fallout from the arrest of a senior executive and other officers in Shanghai.
The ASX/200 index closed 30.8 points higher, or 0.8%, at 3794.1 points, while the All Ordinaries added 29.2 points, or 0.8% to 3790.6 points.
For the week, both were down 0.9%.
