Tuesday September 22nd


Wall Street set for a tumble

Wall Street shares were tipped to open sharply lower on Tuesday, as European markets suffered steep falls. Stock futures for the Dow Jones industrial average were down about 260 points, accelerating losses as European markets came under pressure. Commodities set the tone, with copper slumping more than 2 percent. Traders pin the drop on global growth fears, in part due to a new report from the Asian Development Bank which cut its growth forecast for China. Meanwhile, miners were slammed with Glencore down more than 10 percent. Blue-chip stock markets in London, Frankfurt and Paris were all down more than 2 percent - hurt by a slide in Volkswagen shares following an emissions scandal. Analysts said uncertainty about the timing of U.S. interest rate rises and China's economic outlook also undermined sentiment in global markets, even as Asian shares ended the session broadly higher. Japan's stock market was closed for a holiday. "Equity markets continue to trade cautiously in the wake of last week's decision by the Federal Reserve to hold interest rates at current levels," Michael Hewson, chief market analyst at CMC Markets said in a note. "A number of Fed policymakers have been out hitting the wires in the last few days pouring oil on troubled waters articulating their view that a rate rise this year will still happen, and that for now caution is required given the volatility seen in recent weeks," he said. After a dovish statement from the U.S. Federal Reserve last week, recent comments from Fed officials suggest the central bank could lift rates before the end of the year. St. Louis Fed chief James Bullard, for instance, told CNBC on Monday that a "powerful case" could be made for tightening monetary policy as the U.S. economy strengthens. The day is light on major U.S. economic news, with attention turning to a meeting between China's President Xi Jinping and U.S. President Barack Obama in Washington this week. In an interview with the Wall Street Journal published on Tuesday, Xi Jinping defended Beijing's economic record and said reforms would continue even amid slowing growth and stock market volatility. Elsewhere, Volkswagen remained in focus a day after the German automaker's shares fell sharply on news that it had cheated on U.S. emissions tests. Michael Horn, chief executive of the Volkswagen Group of America, used the launch of the 2015 Passat late Monday to issue an apology and said the firm had "totally screwed up." On the earnings front, AutoZone, ConAgra, Darden and General Mills posted better-than-expected results. Crude oil prices fell as much as 3 percent on Tuesday, unwinding the previous day's steep rally, under pressure from uncertainty over whether global demand will be enough to erode a sky-high surplus. U.S. West Texas Intermediate (WTI) crude futures for November delivery were down $1.48, or 3.2 percent, at $45.20 a barrel. The discount of U.S. crude prices to Brent has tightened to around $2.25 a barrel, from about $8 six months ago and is around its lowest this year. November Brent crude futures were down $1.11, or 2.2 percent, at $47.81 a barrel by 8:50 a.m EDT (1250 GMT), having hit an intraday low of $47.85. Gold prices eased on Tuesday as weakness in stocks and other commodities pulled the market lower, though its losses were limited by some interest in the metal as a haven from risk. Expectations that the Federal Reserve will press ahead this year with its first interest rate increase in nearly a decade also weighed on the metal, dealers said. Spot gold was down 0.42 percent at $1,129.36 an ounce, while U.S. gold futures for December delivery were down $4 an ounce at $1,129.30.