European stocks dropped for a fourth day on concern the region is slowing, hurting global growth. Asian shares fell with metals and Brent crude slumped to the lowest since 2010.
The Stoxx Europe 600 Index lost 0.8 percent by 8:26 a.m. in London. The MSCI Asia Pacific Index sank 1.5 percent, heading for the lowest close since March. Standard & Poor’s 500 Index futures were little changed after the gauge dropped the most since April. Copper in London declined 1 percent while Brent decreased as much as 2.2 percent. Australia (AS51)’s dollar slid 0.4 percent after a report showed home loans unexpectedly declined, while the Turkish lira and Russian ruble weakened.
Concerns are mounting that the global economy may cool after European Central Bank President Mario Draghi said there are signs the region’s recovery is losing momentum. Federal Reserve officials said the U.S. economy may be at risk from a global slowdown as the International Monetary Fund this week cut its outlook for world growth. China is taking targeted steps to support expansion, and Bank of Japan Governor Haruhiko Kuroda said the bank has “many options” for additional easing.
“We have a very weak global demand backdrop, all of the
major economies - the U.S., Europe, Japan, China - they all have
huge structural problems,” said Michael Every, head of Asia
Pacific financial-markets research at Rabobank International in
Hong Kong. “They all need to be dealt with in order to
regenerate some
Equities Rout
The MSCI All-Country World Index lost 0.6 percent, extending yesterday’s 1 percent loss, set for a third weekly decline. Minutes of the Fed’s Sept. 16-17 meeting released this week damped speculation that policy makers will bring forward their timeline for benchmark rate increases.
The Stoxx Europe 600 Index has tumbled 3.2 percent this week, heading for the biggest drop in three months. Draghi pledged yesterday to expand stimulus measures if needed. Sagging exports to Russia and China are putting Germany on the verge of recession, according to an outlook report presented by the four institutes that advise the government.
The S&P 500’s 2.1 percent drop yesterday erased the 1.8 percent jump recorded Oct. 8, which was the index’s steepest one-day advance in almost a year. The Chicago Board Options Exchange Volatility Index surged as much as 28 percent to 19.38, the highest level since February.
Hong Kong Protests
The MSCI’s Asia Pacific Index (MXAP) was down for a fifth week in the longest run of losses since February, data compiled by Bloomberg show. Equity indexes in Australia and South Korea fell at least 1.2 percent. Taiwan’s markets are shut today.
Japan’s Topix (TPX) slumped 1.4 percent for a second weekly loss, as the yen headed for its first weekly gain since August. The currency was at 107.95 per dollar after yesterday reaching 107.53, the strongest since Sept. 17. Kuroda said yesterday the BOJ will adjust its policy if needed to reach its 2 percent inflation target.
Hong Kong’s Hang Seng Index sank 1.8 percent, while the Hang Seng China Enterprises Index fell 1.8 percent as Hong Kong canceled talks with pro-democracy protesters after leaders of the movement called more rallies. China’s yuan halted a four-day advance against the dollar in offshore trading.
The Shanghai Composite Index fell 0.6 percent. China’s Premier Li Keqiang said on Oct. 8 while presiding at a State Council departmental meeting that China’s economy is in a “reasonable range,” even though “downward economic pressure” domestically and globally is big.
Malaysia Budget
Treasuries gained, with two-year yields dropping 11 basis points this week, the most since April 2011. Traders see a 57 percent chance the Fed will raise its benchmark rate by September 2015, fed funds futures data compiled by Bloomberg showed yesterday.
The ringgit fell 0.3 percent to 3.2533 a dollar after the currency climbed to a two-week high of 3.233 yesterday. Malaysian Prime Minister Najib Razak is due to present the annual budget today, when he may give more details on a new consumption tax aimed at reducing the fiscal deficit.
Brent for November settlement decreased as much as $1.94 to $88.11 a barrel on the London-based ICE Futures Europe exchange, the lowest price since December 2010, before trading at $88.99. The European benchmark crude entered a bear market on Oct. 8 on concern global supplies will exceed demand.
West Texas Intermediate oil slid as much as 2.5 percent to $83.59 a barrel in New York, set for the lowest close since 2012, before trading at $84.28. Prices are poised for the biggest weekly loss since January and are also in a bear market.
Copper for three-month delivery on the London Metal Exchange dropped to $6,647 a metric ton, paring its first weekly advance since August. Zinc, lead, aluminum, nickel and tin each fell at least 0.5 percent. Silver for immediate delivery slid 0.4 percent to $17.3053 an ounce, while platinum decreased 1.1 percent.
