Bloomberg:
- Chinese Stocks Crash Again to Extend Biggest Plunge Since 1996. Chinese shares plummeted to extend the steepest four-day rout since 1996 on concern the government is abandoning market support measures. The Shanghai Composite Index tumbled 7.6 percent to 2,964.97 at the close, sinking below the 3,000 level for the first time in eight months. The gauge has dropped 22 percent in four days since Aug. 19. More than 700 stocks fell by the 10 percent daily limit in Shanghai on Tuesday, including PetroChina Co., the nation’s biggest company by value. Hours after the market closed, the central bank cut interest rates and lowered the amount of cash banks must set aside. Speculation around the government’s intentions has escalated since Aug. 14, after China’s securities regulator signaled authorities will pare back the campaign to prop up share prices as volatility falls. The China Securities Regulatory Commission made no attempt to reassure investors after Monday’s plunge, unlike a month ago when officials issued two statements shortly after an 8.5 percent drop. “It’s panic selling and an issue of confidence,” said Wei Wei, an analyst at Huaxi Securities Co. in Shanghai. “The government won’t step in to rescue the market again as it’s a global sell-off and it’s spreading everywhere now. It’s not going to work this time.” Tuesday’s drop is the seventh decline of more than 6 percent for the benchmark gauge in the past three months. The CSI 300 Index declined 7.1 percent, with gauges of energy, technology and material companies sinking more than 8 percent. PetroChina, long considered a favorite holding of state-linked rescue funds, closed at its lowest level since December.
- China Falls Back on Rate-Cut Lever to Stem Stock Market Rout. (video) China fell back on its major levers to stem the biggest stock market rout since 1996 and a deepening slowdown, cutting interest rates for the fifth time since November and lowering the amount of cash banks must set aside. The one-year lending rate will drop by 25 basis points to 4.6 percent effective Wednesday, the Beijing-based People’s Bank of China said on its website Tuesday, while the one-year deposit rate will fall a quarter of a percentage point to 1.75 percent. The required reserve ratio will be lowered by 50 basis points for all banks to cover funding gaps, it said.
- German Economy Boosted by Exports Shows Risks of China Slowdown. Germany’s economic growth was led by exports last quarter, highlighting the risks to Europe’s powerhouse as a slowdown in China threatens to curb global trade. A breakdown of German gross domestic product showed overseas sales climbed 2.2 percent in the three months through June, according to data on Tuesday from the Federal Statistics Office in Wiesbaden. Private consumption rose 0.2 percent, while capital investment shrank 0.4 percent. The economy expanded 0.4 percent, matching an Aug. 14 estimate.
- Russia Trims GDP Forecasts as New Oil Plunge Batters Ruble. Russia lowered its economic forecasts for this year and next year as a renewed plunge in energy prices sank the ruble and sanctions over Ukraine looked set to persist. Gross domestic product in the world’s largest energy exporter will fall 3.3 percent in 2015 before rebounding as much as 2 percent in 2016, Economy Minister Alexei Ulyukayev said Tuesday in Kuala Lumpur, the Interfax news service reported. The ministry had earlier projected a 2.8 percent contraction followed by 2.3 percent growth. Russia’s slump reached a “fragile” bottom last month, Ulyukayev said, predicting an improvement in the economy in the fourth quarter. “I don’t think we’ll go any lower but it’s hard to say when we’ll see significant growth.”
- Petrobras(PBR) Among Brazil Borrowers Most at Risk From Weaker Real. Petroleo Brasileiro SA, the state-controlled oil producer with $55 billion of overseas bonds, is among the Brazilian companies most at risk of seeing leverage ratios swell as the real posts the world’s biggest currency losses. For Petrobras, the electric utility known as Eletrobras, airline Gol Linhas Aereas Inteligentes SA and mall operator General Shopping Brasil SA, every 10 percent depreciation in the real boosts the companies’ debt-to-earnings ratio by a factor of one, according to Fitch Ratings.
- Japan Stocks Plunge Again in Wildest Trading Day in Four Years. Japanese stocks plummeted, after seesawing from gains to losses in the wildest trading range in four years. Volume was more than twice the average. The Topix index slid 3.3 percent to 1,432.65 at the close in Tokyo, reversing an intraday rally of 1.9 percent. It has plunged 15 percent since China sparked a global rout on Aug. 11 when it devalued the yuan. The Nikkei 225 Stock Average dropped 4 percent to 17,806.70, the lowest close since Feb. 10.
- European Stocks Rebound After Worst Day Since 2008. The worst day for European equities since the financial crisis gave way to the biggest rebound in four years. The Stoxx Europe 600 Index climbed 4.3 percent at 4:32 p.m. in London, extending gains to 4.7 percent after China’s central bank cut interest rates and lowered the amount of cash that banks have to set aside. Today’s rebound is just as broad-based as yesterday’s slump, with almost all Stoxx 600 companies rising, and volume of shares changing hands about double the 30-day average.
- Jiangxi Copper Says First-Half Profit Drops on Slowing Economy. Jiangxi Copper Co., China’s biggest smelter, reported a 17 percent fall in first-half profit as a slowdown in the world’s biggest buyer of metals curbed demand and sent prices skidding to six-year lows. Net income declined to 1.06 billion yuan ($165 million) from 1.27 billion yuan, Jiangxi Copper said in a statement. Sales fell 19 percent to 75.5 billion yuan under Chinese accounting standards. “Prices of company’s main line of products including copper, gold, silver dropped largely amid weak economy, strong dollar and slowing consumption, putting huge pressure on company’s production and operations,” the world’s fifth-biggest smelter said.
- BHP Cuts China Steel Forecast as Profit Slumps 52% on Prices. BHP Billiton Ltd. reported full-year profit plunged 52 percent on tumbling commodity prices and cut its long-term forecasts for steel output in China, its largest customer. Underlying profit was $6.4 billion in the year ended June 30 from $13.3 billion a year earlier, the world’s biggest mining company said Tuesday in a statement. BHP will increase its dividend by 2.5 percent to $1.24 a share. The producer’s revision is a response to China’s faltering growth, Ric Spooner, a chief market strategist at CMC Markets Asia Pty, said by phone from Sydney. “At this stage, their views on production are unlikely to lead to changes in existing strategy, because those strategies are well advanced.”
- Iron ore rout awaits Goa as mines reopen after long gap. Goa’s mines are due to restart in October. Mumbai: Goa is preparing to mine iron ore after a three-year gap just as the commodity plunges anew amid a global surplus. The benchmark price of ore with 62% iron content at China’s Qingdao port fell 5% on Monday and is down about 41% in the past year. Goa’s mines are due to restart in October, even as Goldman Sachs Group Inc. sees a drop of about 30% in global prices over 18 months on excess supplies.
- Chemical Makers Signal U.S. Manufacturing to Slow. Slumping chemical index suggests U.S. industrial production will decline further. Chemical industry activity is slowing, which isn't a good sign for the future of U.S. industrial output. One of the big questions surrounding the outlook for the U.S. expansion is how slowing growth abroad and a strong dollar will affect U.S. exports and manufacturing. The Federal Reserve's index of industrial production has slowed this year, rising 1.3 percent for the 12 months ending July, down from a 4.5 percent gain at the start of the year. The Chemical Activity Barometer (CAB), whose indicators include the production, inventory and selling prices of numerous chemicals as well as prices of chemical stocks, rose 1.8 percent in August from a year ago (on a 3-month moving average basis), the slowest pace since late 2012. That's concerning since declines in chemical demand have preceded drops in industrial output in the past, according to Kevin Swift, chief economist for the American Chemistry Council and creator of the index.
- Bond Traders Bet on More Candy From Fed After Latest Tantrum. Parents of screaming toddlers have a choice: Give in, and set a bad precedent for tomorrow, or place limits and risk a prolonged tantrum. Central bankers face a similar dilemma with markets these days. So far, their response has been largely the former, deferring to traders’ fits by maintaining or even adding to their stimulus, as China did Tuesday. Now, bond traders are betting the Federal Reserve will continue to coddle investors by pushing back the timing of its first interest-rate increase since 2006. Why? Because things look a little shaky right now. Global equity markets lost more than $5 trillion of value in less than two weeks as traders grew increasingly worried about a bigger-than-expected slowdown in China derailing global growth. David Kelly, chief global strategist at JPMorgan Chase & Co.’s JPMorgan Funds unit, said it would be a mistake for the Fed to base its decision on recent market moves. “It’s a lot like raising a 2-year-old: you have to set limits and be consistent,” Kelly said. “It reduces uncertainty” to stick with a steady message and stay on course. Futures traders are pricing in a 26 percent chance the Fed will raise rates from near zero in September, down from 40 percent at the end of July, according to data compiled by Bloomberg. Barclays Plc now sees the Fed making a move in March after previously forecasting September, chief U.S. economist Michael Gapen said in a report Monday.
- Toll(TOL) Profit Drops as Luxury Homebuilder Hurt by Lower Prices. Toll Brothers Inc., the largest U.S. luxury-home builder, said fiscal third-quarter earnings fell as lower prices and unit sales caused revenue to decline. Net income for the three months ended July 31 totaled $66.7 million, or 36 cents a share, compared with $97.7 million, or 53 cents, a year earlier, the Horsham, Pennsylvania-based company said in a statement Tuesday. Revenue fell to $1.03 billion from $1.06 billion.
Wall Street Journal:
- China Eases but Stench of Crisis Remains. In addition to monetary-policy moves, PBOC takes step toward liberalizing interest rates.
Fox News:
- IRS reveals existence of another Lois Lerner email account. (video) The IRS admitted to a federal court there was a second personal email account that Lois Lerner, the official at the heart of the Tea Party targeting scandal, used to conduct agency business. The email account apparently was set up under the name, "Toby Miles."
CNBC:
- He called the collapse; here's what he's watching. (video) Raoul Pal, Global Macro Investor, gives his outlook for a recession and perspective on today's historic selloff. Stocks were slammed in Monday's session, continuing a brutal three-day stretch that saw the Dow shed more than 1,400 points at breakneck speed. More than $680 billion in market cap evaporated from S&P 500 companies on Monday alone. But even with all three major U.S. averages now firmly in correction territory, one noted market analyst, who has been calling for a sharp selloff, says the bleeding could be far from over. "World growth has slowed somewhat, quiet significantly, and I think U.S. growth has slowed a lot," Raoul Pal of the Global Macro Investor and Real Vision TV told CNBC's "Fast Money" on Monday.
Business Insider:
NY Times:
- Leon Cooperman Fund Said to Have Lost 11% This Month. Leon Cooperman's fund was said to have lost 11% this month as of Friday, citing unidentified people. Bridgewater Associates told investors on Friday that its Pure Alpha fund was down 4.7% for the month.
Financial Times:
- This year is worst for trade since crisis. World trade recorded its largest contraction since the financial crisis in the first half of this year, according to figures that will feed concerns over the global economy and add fuel to a debate over whether globalisation has peaked. The volume of global trade fell 0.5 per cent in the three months to June compared to the first quarter, the Netherlands Bureau for Economic Policy Analysis, keepers of the World Trade Monitor, said on Tuesday. Economists there also revised down their result for the first quarter to a 1.5 per cent contraction, making the first half of 2015 the worst recorded since the 2009 collapse in global trade that followed the crisis.
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