20 June 2013 21:35 [Source: ICIS news]
HOUSTON (ICIS)--Stocks among chemical producers in the Americas fell sharply on Thursday as the US Dow Jones Industrial Average fell by 2.34%.
The average closed at 14,758.24, down by 353.95 points. It was the biggest one-day drop since November 2011, according to The Wall Street Journal.
Chemical stocks performed about as poorly as the general market, with the Dow Jones US Chemicals Index falling by 2.35%.
A majority of the Americas companies followed by ICIS fell by more than 2%, with several losing more than 3%.
The biggest loser was US-based formulator PolyOne, which fell by 5.34%. Colombia-based Ecopetrol fell by 5.14% and US-based refiner Phillips 66 fell by 5.09%.
Among the majors, US-based Dow Chemical fell by 2.67% and US-based DuPont dropped by 1.65%.
Canada-based fertilizer producer PotashCorp fell by 3.10% and US-based industrial gases producer Praxair dropped by 2.64%.
US-based specialty chemicals producer Eastman Chemical fell by 2.59%.
Of all of the companies in the Americas followed by ICIS, only Chemtrade Logistics rose. The sulphuric acid producer rose by 0.29%.
The stock market fell after a statement issued on Wednesday by the Federal Reserve. It was released at the end of a two-day economic and rate-setting session by the central bank’s federal open market committee (FOMC).
In that statement, the Fed said that it would continue its policy of purchasing mortgage-backed securities at a pace of $40bn (€30bn) per month and monthly buys of $45bn in long-term Treasury Department securities to exert downward pressure on long-term interest rates.
There had been speculation on Wall Street that the Fed, in anticipation of a stronger recovery and fearful of inflationary pressures, might start to roll back its “quantitative easing” policy (QE2) by reducing the amount of securities it is buying each month.
Those worries were not allayed by Wednesday's statement. After falling the previous day, the stock market resumed its decline for the second day.
The rout extended into oil markets, with July West Texas Intermediate (WTI) futures falling by $2.84/bbl to close at $95.40/bbl.
August WTI futures fell by $3.34/bbl to $95.14/bbl.
ICE Brent for August delivery established an intra-day low of $102.03/bbl and settled at $102.15/bbl, down $3.97.
In addition to the Fed, crude prices were also pushed lower by news that June factory output in China fell to a nine-month low and US manufacturing posted its worst quarter in the past year. Investors also remain concerned about the struggling European economies.
The big mover of all markets, analysts said, was the news from the Fed. The net effect of the economic stimulus programme has been a weaker dollar, which has pushed investors to seek better returns in the commodities and stock markets. If the government eases QE2, bond prices are expected to fall, which will make yields rise and make bonds a more attractive investment. That, some analysts expect, will cause investors to get out of commodities and back into Treasurys.
($1 = €0.75)
Additional reporting by Joe Kamalick and Mark Yost
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