DJI - NEW YORK, Feb 25 (Reuters) - U.S.
stocks on Monday suffered their biggest drop since November after a strong
showing in Italian elections by groups opposed to the country's economic
reforms triggered worry that Europe's debt problems could once again
destabilize the global economy.
The decline marks the biggest
percentage drop for the benchmark Standard & Poor's 500 Index since Nov.7,
and drove the S&P down to its lowest close since Jan. 18. The CBOE
Volatility Index or VIX, Wall Street's favorite barometer of
fear, surged 34 percent, its biggest jump since Aug. 18, 2011.
Selling accelerated late in the
trading session after the S&P 500 fell below the 1,500 level, which has
acted as a significant support point. Monday marked the S&P's first close
under 1,500 since Feb. 4.
Italy's center-left coalition holds
a slim lead over former Prime Minister Silvio Berlusconi's center-right bloc in
the election for the lower house of parliament, three TV projections indicated.
But any government must also command a majority in the Senate, a race that is
decided by region.
The resulting gridlock in parliament
could lead to new elections and cast into doubt Italy's ability to pay down its
debt.
"Europe hasn’t gone away as an
issue, it is going to hang around, and it is rearing its ugly head today,"
said Stephen Massocca, managing director of Wedbush Morgan in San Francisco.
"If someone gets elected who is
simply not going to play by the rules, what are they going to do? It puts them
in a real quandary here because their financial support, their monetary support
is all stipulated by the fact that these austerity programs are going to be in
place."
Earlier polls pointing to a
center-left victory boosted stocks in Milan and other European markets, and
also helped lift the S&P 500 to a session high of 1,525.84 on optimism that
Italy would continue down its austerity path.
The Dow Jones industrial average dropped 216.40 points, or 1.55 percent, to 13,784.17 at the close. The Standard
& Poor's 500 Index lost 27.75 points, or 1.83 percent, to
1,487.85. The Nasdaq Composite Index fell 45.57 points, or 1.44 percent, to 3,116.25.
U.S. equities will face a test with
the looming debate over so-called sequestration - U.S. government budget cuts
that will take effect starting on Friday if lawmakers fail to reach an
agreement over spending and taxes. The White House issued warnings about the
harm the cuts are likely to inflict on the economy if enacted.
Brent Crude Oil - NEW YORK, Feb 25 (Reuters) - Brent crude futures edged up
on Monday, supported by data showing strong demand for imported crude in China
in January, but uncertainty about Italy's election pulled oil off its early
peak.
CBOT Soybean - Soybean futures on the Chicago Board of Trade fell for a
second straight session, pressured by the expanding harvest of a
likely record-large crop in Brazil and welcome rains in Argentina, traders said.
* Additional pressure stemmed from long liquidation following last week's 3-1/2 month high.
·
However,
the market pared losses toward the close, helping March
soybeans to settle nearly 13 cents above its intraday
low of $14.38-1/2.
·
Brazil's
2013/14 soybean harvest was 28 percent complete as of
Friday, up from 19 percent a week earlier, analyst Celeres said.
·
Weekend
rains in Argentina's main crop belt arrived just in time to
avert serious damage to soy and corn crops after weeks of
dry weather, said Eduardo Sierra, a climate adviser to the Buenos
Aires Grains Exchange.
·
Argentina's
Rosario grains exchange lowered its estimate of the
country's 2012/13 soybean harvest to 48 million tonnes, down
almost 10 percent from a month ago due to a long dry spell.
·
USDA said
private exporters reported sales of 120,000 tonnes of
U.S. soybeans to China for 2013/14 delivery.
·
USDA
reported export inspections of U.S. soybeans in the latest
week at 27.284 million bushels, below trade estimates for 35 million
to 45 million.
·
The CBOT
spot March soybean contract retreated below its 50-,
100- and 200-day moving averages but held above chart support at
its 50-day average near $14.38.
·
Basis bids
for soybeans shipped by barge to the U.S. Gulf Coast
drifted lower early on Monday following a flood of recent sales by farmers, traders said.
BMD CPO - SINGAPORE, Feb 25 (Reuters) -
Malaysian palm oil futures slid to their lowest in nearly a month on Monday,
tracking steep falls in other vegetable oil markets, although
better-than-expected export numbers helped rein in losses.
The most active U.S. soyoil contract
for May delivery was down 0.7 percent in late Asian trade
after losing almost 2 percent on Friday, weighed down by weak soybean prices
due to improved prospects for South American supply.
Investors were also reacting to
falls in China's most active September soyoil contract ,
which tumbled more than 3 percent to its lowest since mid-November, hurt by
concerns over demand growth after a slip in the country's manufacturing output
index. By 1011 GMT prices had slid by 3.2 percent.
"The market is tracking the
U.S. and Dalian soybean oil markets. All these are external factors," said
a trader with a foreign commodities brokerage in Kuala Lumpur.
The benchmark May contract on the Bursa Malaysia Derivatives Exchange had eased 2.5 percent to 2,471
ringgit ($797) per tonne by Monday's close, but were off an earlier low of
2,461 ringgit, the lowest level since Jan. 29.
Total traded volume stood at 37,569
lots of 25 tonnes each, higher than the usual 25,000 lots, as traders rushed to
liquidate positions.
Investor sentiment picked up,
however, after cargo surveyor Intertek Testing Services reported a 4.6 percent
increase in Malaysian palm oil exports to 1,153,852 tonnes for the Feb. 1-25
period from a month ago.
Another cargo surveyor, Societe
Generale de Surveillance, reported exports in the same period picked up 2.7
percent, buoyed by higher shipments to Europe and India.
"The numbers were slightly
better than expected and will probably stay at this pace towards the end of the
month on a last-minute push to ship out tax-free crude palm oil," said a
dealer with a foreign commodities brokerage in Malaysia.
Malaysia, the world's No.2 producer
of the edible oil, will raise February's zero percent export tax to 4.5 percent
in March after keeping it unchanged for two months.
Traders are counting on improving
palm oil exports and seasonally slowing output in the world's No. 2 producer of
the edible oil to help ease stockpiles that stood at 2.58 million tonnes in
January.
In other markets, Brent crude wiped
out early losses to trade above $114 per barrel on Monday as a firmer euro
supported prices, although worries that a retreat in China's manufacturing
activity would dent demand from the world's top energy consumer capped gains.
Regional Equties - BANGKOK, Feb 25 (Reuters) -
Southeast Asian stock markets rose on Monday as investors bought shares in
companies such as Genting Singapore Plc and PT Bank Mandiri Persero Tbk that showed strong quarterly results with rosier earnings prospects.
Singapore's Straits Times Index closed 0.02 percent higher at 3288.76, with Genting among the top performers.
It rose 1.9 percent, adding on Friday's 3.7 percent rise after the casino
operator's results came above market estimates
Jakarta's Composite Index gained nearly 1 percent to 4696.11, a record close, with shares in Bank Mandiri
up 2.1 percent. For earnings report, click
The Philippine main index hit a record finish of 6,721.33, up 0.8 percent. Malaysia's benchmark index ended near a one-week high of 1,627.35, up 0.3 percent and Vietnam rose 1.3 percent to 483.69.
The Thai stock market was shut for a market holiday, and reopens on Tuesday.
The region for the most part saw
light trading volume as concerns over the pace of the global economic recovery
weighed.
The MSCI's broadest index of
Asia-Pacific shares outside Japan was up 0.16 percent by 0930 GMT.
FOREX - NEW YORK, Feb 25 (Reuters) - The
euro fell to a more than six-week low against the dollar on Monday, while the
yen soared broadly as worries about political gridlock in Italy spurred
investors to seek refuge in the U.S. and Japanese currencies.
With more than two-thirds of the
vote counted, the projections suggested the centre left could have a slim lead
in the race for the lower house of parliament. But no party or likely coalition
appeared to be able to form a majority in the upper house or Senate.
A deadlocked parliament could
threaten Italy's economic reforms and reignite the euro zone debt crisis.
Optimism the worst of the region's crisis was over benefited the euro earlier this
year.
The yen, at one point, soared more
than 3 percent against the euro and 2 percent against the dollar. Steep losses
in the yen in recent months on bets of further monetary easing in Japan have
made it vulnerable to sharp reversals.
"Considering the substantial
short yen positioning, I don't think it's completely surprising to see the
move," said Vassili Serebriakov, currency strategist at BNP Paribas in New
York. "If you look at what's been moving, the largest move is really
euro/yen."
