For the first time in 27 years, New York stock markets closed for a weather-related reason. Hurricane Sandy—nicknamed Frankenstorm for its timing near Halloween—is expected to approach two other weather systems to create a super-storm. Expected to hit New York City on Tuesday, the approach of Hurricane Sandy has the world’s leading financial center to be evacuated and the stock markets to be shut down. The approaching hurricane is expected to impact up to 60 million people and may become the United States largest hurricane since record keeping began.
Both the New York Mercantile Exchange and the New York Stock Exchange have stated that their trading floors and electronic trades would be closed. As a result, many stock markets in the world dropped during trading on Monday.
The problems associated with the impending storm have been further compounded by the approaching presidential election in the United States. On November 6, the nation will have to decide between electing incumbent President Obama and former Governor Mitt Romney. With a fiscal cliff to avert and Federal Reserve Chairman to select in the upcoming months, the selection of the next president has placed markets on edge. Most analysts believe that the markets will avoid taking major risks until the election is over.
In the United Kingdom, the FTSE retreated 0.3 percent to 5,786.24 while the German DAX lost 0.4 percent to 7,200.70. In France, the CAC-40 dropped 0.8 percent to reach 3,407.32.
Asian Markets Close at Lower levels
Earlier in the trading session, markets in Asia had initially made gains. By the end of the day, the markets retreated. In Japan, the Bank of Japan in expected to hold a policy meeting tomorrow in order to resolve the country’s sluggish economy. The Japanese Nikkei 225 dropped slightly to settle at 8,929.34 by the end of the day.
Honda Motor Corporation, a major car maker in Japan, lowered its forecasts for 2013. After territorial disputes with China over a series of islands, Japan has lost market share in the world’s second largest economy. Due to lowered Chinese sales, Honda has seen its sales drop over the last month. Shares in Honda Motor Corporation dropped by 4.7 percent on Monday. By the end of the trading session, shares in the company were at 2,399 yen which marks the largest drop for the stock in more than a month.
In Hong Kong, the Hang Seng dropped 0.2 percent to reach 21,511.05. The drop was compounded by property shares due to a government statement that non resident purchasers would have to pay a new 15 percent tax on property. Many in Hong Kong blame higher housing prices on mainland Chinese buyers. The new tax is intended to tamp down property prices and make real estate purchases more affordable for local buyers. After this announcement was made, shares in Henderson Land Development Company and Sino Land Company both dropped by 6.4 percent.
The South Korean Kospi held steady throughout the day to end at 1,891.52. LG Display Company posted its first profit in over a year. Afterward, shares of LG Display Company in Seoul rose by 7.6 percent. Data released by the company showed that it had a net income of 158.2 billion won or $144 million greenbacks on October 26. Shares increased to 32,450 which mark their highest levels in 16 months. In Australia, the S&P/ASX 200 rose 0.2 percent to reach a level of 4,476.90.
The largest oil refiner in Asia, China Petroleum & Chemical Corporation gained 2.9 percent over the day of trading to end at HK$8.25. Sinopec also gained during the day due to higher-than-expected third-quarter profits. The state raised retail fuel prices two times during the quarter. The higher amount of petrochemical sales helped overall earnings for the company.
Canadian Stock Market Remains Open
Despite the approaching hurricane in the United States, Canadian stock markets are expected to remain open. Many investors expect that Canada’s main stock index will open lower due to continued debt problems in Europe and overall lower corporate earnings. Trade volumes will also be lower since the United States stock markets will be closed for the duration of Hurricane Sandy.
Due to the storm, the drug maker, Pfizer Incorporated will delay its release of quarterly earnings. Entergy Corporation and NRH Energy Incorporated will also postpone the release of their earnings.
The Malaysian state oil firm, Petronas, is planning on renewing its bid for the gas producer, Progress Energy Resources Corporation. It has sought to ease any worries expressed by the Canadian government over the deal and assures Canada that the purchase will benefit both nations. The deal is expected to encompass $5.17 billion Canadian dollars.
In other events, TransCanada Corporation recently created a joint venture with the company, Phoenix Energy Holdings Limited. They will begin work on creating a pipeline in Northern Alberta. The project is expected to cost roughly $3 billion Canadian dollars.
Long Term Budget Meeting
Members of the various nations in the European Union will begin working on a long-term budget this week. Rumors indicate that the budget debate will start with an offer to trim off 50 billion euros from the proposed budget of 1 trillion euros.
Egyptian Stocks Rise
On Monday, the Egyptian stock market posted significant gains. This day was the first time the stock market has been open since the Eid holiday. President Morsi’ government is getting closer to receiving a loan from the International Monetary Fund. Buoyed by this hope, investors pushed the benchmark EGX30 up by 1.8 percent or 5.893 points. Turnover for the day was still a low LE579.4 million due to many domestic investors still being away on holiday. On Tuesday, a team from the International Monetary Fund is expected to land in Cairo to begin talks over the potential loan.
Some of the largest rises in share prices for the day were recorded by Orascom Construction Industries and Commercial International Bank. Orascom shares rose by 2.4 percent while shares of the Commercial International Bank gained by 1.2 percent. The Talaat Mostafa Group posted gains of 3.7 percent for the day.