Global stocks fell to 14-month lows and the euro reversed gains as growing concern about the impact on the banking sector of a possible Greek default offset vows from G20 leading economies to shore up the financial system.
|||Global stocks fell to 14-month lows on Friday and the euro reversed gains as growing concern about the impact on the banking sector of a possible Greek default offset vows from G20 leading economies to shore up the financial system.
European shares fell 1.8 percent, extending Thursday's losses of almost 5 percent, with banking shares suffering the most after Deutsche Bank said the region's banks may face a bigger-than expected hit from an internationally agreed swap arrangement on Greek government debt .
Riskier assets had staged a tentative recovery earlier after finance ministers and central bankers from the Group of 20 said they would take “all steps necessary” to calm the global financial system and said central banks were ready to provide liquidity.
US stock index futures pointed to further losses on Wall Street, adding to steep declines the previous session as investors cut exposure to riskier assets globally on growing risks of recessions in the United States and Europe and weaker economic data from China.
Global stocks as measured by the MSCI All-Country index are now in bear market territory - defined as a fall of 20 percent or more from their peak - having tumbled 23 percent from their 2011 high in May.
The index was last down 0.9 percent at 274.84, having fallen as low as 274.72, its lowest level since July 2010 as scepticism also grew that the G20 pledges would be followed up with action.
“It's the usual platitudes... but they don't have the political capital to do what they need to do, which is bail out the southern European countries and recapitalise all the banks. I think it's a complete nonsense,” Andrew Lim, banks analyst at Espirito Santo said.
“The short-term funding market is drying for some banks, and the wholesale funding market has also pretty much dried up,” he added.
The pan-European FTSEurofirst 300 index fell 1.8 percent, after dropping 4.7 percent on Thursday while futures for the S&P 500 , the Dow Jones and the Nasdaq 100 were up 1.3 to 1.5 percent.
European banks led the reversal in gains with some French banking stocks under increasing pressure again. They have suffered heavy losses due to their exposure to euro zone sovereign debt and concerns about their liquidity and funding.
Societe Generale , which has lost nearly 60 percent since July, was 2 percent lower while Credit Agricole was 4.5 percent down.
The oil price also turned lower, with Brent crude hitting a six-week low near $103 a barrel on concerns about the outlook on the global economy and oil demand.
G20 finance ministers and central bankers meeting in Washington are under pressure from investors to show action in the face of rising stresses in the financial system.
“Talk is cheap at the minute,” said Orlando Green, European fixed income strategist at Credit Agricole. “No matter how many proposals or pledges you get, action is required.”
NO IMMINENT CIRCUIT BREAKER
The euro gave up gains against the dollar and the yen, as investors sold into the earlier bounce. It was 0.2 percent down at $1.3429 against the dollar, not far from Thursday's 8-month low of $1.3384.
Traders said that unless markets stabilised, most would seek to trim risk exposure for the relative safety of the dollar and yen. Both rallied on Thursday as investors cut exposure to commodity- and growth-linked currencies.
The dollar on Friday was last 0.1 percent firmer at 78.53 against a basket of currencies , within sight of a seven-month high of 78.798 reached on Thursday.
“With no immediate circuit breaker on the horizon, investor confidence is quickly evaporating, which is increasing the risk of a financial market crash developing in the coming months,” Bank of Tokyo Mitsubishi UJF said in note.
“In these circumstances, the safe-haven currencies of the yen and US dollar should continue to outperform against more cyclically sensitive, commodity-linked G10 currencies.”
Metals prices extended falls on worries that the gloomy economic outlook signalled lower industrial demand.
Commodity markets, copper in particular, bore the brunt of the global rout on Thursday that accompanied the US Federal Reserve's gloomy economic outlook.
Metals fell further on Friday, with three-month copper on the London Metal Exchange slumping to $7,115.75 a tonne, its lowest level since August 2010 before paring losses to last trade 3 percent down at $7,450 a tonne.
The sell-off in commodities pulled gold prices lower, with spot gold down 0.2 percent at $1,731.29 an ounce. - Reuters
Source: http://www.iol.co.za/world-shares-hit-14-month-lows-1.1143759
Foreign currency Facebook Alexander McCall Smith Mortgages US foreign policy Kevin Campbell
No comments:
Post a Comment