Growth worries grip stocks, oil markets
Reuters
Published Oct 08, 2014 11:20AM ET
Growth worries grip stocks, oil markets
By Yasmeen Abutaleb
NEW YORK (Reuters) - An index of global equities hit a six-month low and oil prices slumped again on Wednesday, as investors reduced positions in riskier assets amid concerns about global economic growth.
U.S. markets were little changed after a sharp selloff Tuesday, as market participants awaited the release of the minutes of the most recent Federal Reserve meeting later in the day. DJc1 SPc1
Data and forecasts from China, Spain and Germany supported a picture painted by the International Monetary Fund on Tuesday of a world economy struggling to end a cycle of low growth since the 2008 financial crisis.
MSCI's all-country world index (MIWD00000PUS) of shares in 45 different countries fell 0.39 percent to its lowest in six months, while the pan-European FTSEurofirst 300 (FTEU3) index fell 0.74 percent.
Oil prices slipped to two-year lows. Brent crude oil LCOc1 dipped below $91 a barrel, its lowest since June 2012. U.S. November crude CLc1 was down at $87.12 a barrel.
"Many people are seeing the decline in commodities to be a sign of slower world growth," said Marc Chandler, chief global currency strategist at Brown Brothers Harriman & Co.
"After a big run up in equities earlier, this is a bout of profit taking."
The fall in the price of oil, however, could boost consumer spending as it reduces fuel costs heading into winter, but also serves as an indication of weakened demand worldwide.
The Dow Jones industrial average (DJI) fell 2.44 points, or 0.01 percent, to 16,716.95, the S&P 500 (SPX) lost 1.57 points, or 0.08 percent, to 1,933.53 and the Nasdaq Composite (IXIC) dropped 4.19 points, or 0.1 percent, to 4,381.01.
Benchmark 10-year U.S. Treasury notes (US10YT=RR) were last up 3/32 in price to yield 2.3391 percent, the lowest in more than a month.
The dollar index <.DXY>, which tracks the greenback against six major currencies, was flat at 85.683 after slipping the previous two sessions. It is still trading near four-year highs.
Against the yen, the dollar was up 0.1 percent at 108.13 yen <.JPY=>. The euro was up against the dollar 0.06 percent at $1.2676.
Growth in China's services sector weakened slightly in September as new business cooled, a private survey showed on Wednesday, reinforcing signs of a slowdown in the world's second-largest economy that could prompt more stimulus measures.
A flood of new dollars printed by the U.S. Federal Reserve has allowed stock markets to ignore shaky economic prospects for much of the developed world over the past three years.
But the Fed is set to end its bond-buying this month, and the outlook for the Japanese, Chinese and European economies is less than optimistic. Prices of stocks and other more growth-dependent assets have fallen accordingly since mid-August.
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Figures out of Germany this week have called into question growth in the euro zone's biggest and most robust economy. Meanwhile, Spain's industrial output grew at its slowest since a year ago.
While investors don't expect an about-turn in U.S. monetary policy, they wondered if less robust euro zone nations might inject stimulus to boost their economies.
Market participants also questioned whether the dollar's gains since May would lead the Fed to raise rates more slowly over the next couple of years.
The dollar has gained more than 10 percent against the euro since early May and around 8.5 percent against a basket of currencies <.DXY>. That should hold down the price of imports and slow U.S. inflation, and it may make U.S. policymakers reluctant to boost the dollar further by raising interest rates.
(Editing by Bernadette Baum)
Written By: Reuters
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