Stocks plunge globally following emerging markets selloff

Gloom enveloped global markets yesterday as investors fretted over prospects for developing markets.

Dublin slid as European stocks posted their biggest weekly decline in seven months amid a selloff of emerging-market currencies. A report also showed that China’s manufacturing industry had unexpectedly contracted.

UK stocks posted the biggest weekly decline since June, while the fall in US stocks pushed the Dow Jones Industrial Average toward its biggest weekly decline since May 2012.

National benchmark indexes fell in all 18 western European markets. The Iseq in Dublin fell 2.1 per cent, the FTSE 100 slipped 1.7 per cent, while Germany's DAX lost 2.5 per cent.

DUBLIN
CRH slipped by 2.8 per cent to close the day at €19.19, despite a report on the US housing market that showed recovery there was gaining ground. The building materials giant is engaged in a review that is likely to see it dispose of non-core assets. The company is also considering focusing more on emerging markets, and suffered amid the Asian selloff yesterday.

Glanbia, which has significant milk powder interests in China, also took a hit yesterday. It fell by 4 per cent to end the day at €10.75. One of its management facilities in Waterford was gutted by fire yesterday morning. Smurfit Kappa, the paper and packaging giant that is heavily exposed to emerging markets in Latin America, fell by 5.3 per cent to finish at €18.10. One of the few climbers on the Iseq was Mincon, the mining equipment maker, which ended the day up more than 5 per cent at €1.

LONDON
Pearson, the FT newspaper publisher, dropped 8.5 per cent after the company said it spent about £170 million in 2013 to help focus its business on more profitable units. It had forecast expenditure of £150 million. It lowered its estimated savings to £40 million from its previous prediction of £50 million.

Aberdeen dropped 5.7 per cent to 397.3 pence after Morgan Stanley downgraded the shares to underweight from equal weight, meaning investors should sell the stock. The brokerage cited worsening fund performance and challenging emerging-market fundamentals.

Banks suffered following the emerging-market selloff. Standard Chartered, which got almost three-quarters of its earnings from Asia in 2012, retreated 2.6 per cent to 1,309.5 pence. HSBC, Europe's biggest bank by market value, fell 2 per cent to 645.9 pence.

EUROPE
Adidas plunged 5.5 per cent to €86.12, its biggest drop since September 2011. Deutsche Bank lowered its estimates for the company's per-share profits in 2014 by 8 per cent and in 2015 by 6 per cent, citing adverse effects of currency swings. Celesio, which owns the Lloyds pharmacy chain in Ireland, jumped 8.7 per cent. McKesson, the largest US drug distributor, said it bought Celesio's convertible bonds from hedge fund Elliott Management Corp, giving it more than 75 per cent ownership of Celesio's shares. Delhaize Group gained 5.7 per cent. The owner of the Food Lion supermarkets said fourth-quarter sales in the US and in Belgium, its two main markets, increased 2.8 per cent and 2.4 per cent, respectively.

NEW YORK
International Game Technology, a high-profile slot machines manufacturer, tumbled 13 per cent to $15.40. The Las Vegas-based company posted earnings of 25 cents a share, missing the average analyst estimate by 6 cents. Procter & Gamble advanced 2.7 per cent to $80.37 and led the Dow's gainers. The stock jumped after the world's largest household products maker reported lower quarterly profit, but kept its 2014 sales forecast unchanged.

Microsoft shares rose 2.6 per cent to $36.98 and gave the biggest boost to the S&P 500 after the world's largest software company posted a bigger- than-expected quarterly profit. (Additional reporting: Bloomberg/Reuters)