|
 In a holiday-shortened week, share prices fell in Asia and Europe.
The gloom looked set to carry over to Wall Street, according to
index futures.
Lackluster manufacturing data from across the world set off this
week's selling spree, notably Chinese factory activity shrinking for
the 14th straight month and British output at three-month lows.
Tuesday's surprise interest rate cut in Australia and downgraded
growth and inflation forecasts from the European Commission also
weighed.
Data on Tuesday showed euro zone retail sales falling by a
bigger-than-expected 0.5 percent in March. Later this week, the
focus will shift to U.S. monthly jobs data, numbers seen key to the
Federal Reserve's interest rate outlook.
In addition, corporate earnings have consistently undershot
expectations -- U.S. S&P 500-listed companies' first quarter
earnings are down 5.4 percent versus year-ago levels and are set for
a third quarter of declines.
"The deflationary pressures remain and it's hard to see markets
making much headway at the moment," said Richard Griffiths,
associate director at Berkeley Futures.
Investors increasingly view the world's biggest central banks as
powerless to stem the growth malaise despite cutting rates to zero
or into negative territory and buying trillions of dollars worth of
bonds.
MSCI's index of world stocks was down half a percent to three-week
lows after falling 1 percent on Tuesday for its biggest one-day fall
in a month.
Emerging equities also extended losses, falling more than 1 percent.
The pan-European FTSEurofirst 300 index dropped almost 1 percent to
its lowest in more than three weeks, by a 3.2 percent drop in basic
resources stocks.
Britain's miner-heavy FTSE 100 index fell 1.3 percent.
Shares in Dialog Semiconductor slumped 14 percent after the maker of
chips used in Apple and Samsung phones reported a 58-percent drop in
underlying operating profit, continuing the saga of underwhelming
profits at tech firms.
"We see a continuation of the risk-off pattern that gained ground
yesterday," said Daniel Lenz, a strategist at DZ Bank.
MSCI's main Asia-Pacific stocks index, excluding Japan, fell 1.2
percent. Japanese markets are closed most of this week for a
holiday.
[to top of second column] |
STABILIZATION
The worst of the near-term market angst may be dissipating, however.
The flight from risk had played out in forex markets with investors
favoring currencies from economies with current account surpluses,
such as Japan. But the yen slipped off 18-month highs against the
dollar of 105.55. It traded at 106.77 per dollar, down 0.2 percent
on the day.
The euro fell 0.2 percent to $1.1472.
The dollar rose 0.3 percent against a basket of currencies,
recovering from 15-month lows hit on Tuesday.
On bond markets too there were some signs of stabilization.
U.S. Treasuries and German Bunds, typically the assets of choice in
a weak-growth environment, saw yields tumble this week, with the
former hitting two-week lows while 10-year Bund yields posted their
biggest daily fall of 2016.
Ten-year Bund yields steadied but stayed almost 10 bps below last
Friday's levels when they were close to six-week highs.
Crude futures inched higher after two days of losses though
Brent remains around 7 percent below 5-1/2-month highs hit at the
end of April.
Copper, often viewed as a key growth barometer, remained under the
cosh, hit by the weak manufacturing data and stronger dollar. London
three-month copper followed Tuesday's 2.6 percent fall with a
further 1.2 percent drop, to $4,863 a tonne. Aluminum and zinc
also fell.
(Additional reporting by Dhara Ranasinghe and Sudip Kar-Gupta;
Editing by Jeremy Gaunt and John Stonestreet)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
