Open

Coming up

Don't miss

Replay


LATEST SHOWS

ENCORE!

Alain Choquette: A Hilarious Magician in Paris

Read more

FOCUS

France welcomes Iraqi Christian refugees

Read more

FRANCE IN FOCUS

Emmanuel Macron: A new economy minister with a pro-business agenda

Read more

THE OBSERVERS

More of this year's best Observers stories

Read more

#TECH 24

Changing the world, one video game at a time

Read more

IN THE PAPERS

Socialist Party summer conference kicks off in explosive atmosphere

Read more

IN THE PAPERS

Canada and Russia exchange snarky tweets

Read more

AFRICA NEWS

Ebola in Nigeria: First death outside of Lagos

Read more

AFRICA NEWS

Niger: Top opposition figure to be questioned in baby-trafficking scandal

Read more

  • Exclusive: Fabius warns of further sanctions against Russia

    Read more

  • British killer escapes from French psychiatric hospital

    Read more

  • First case of Ebola confirmed in Senegal

    Read more

  • Police hunt for British boy with brain tumour taken to France

    Read more

  • Ukraine to relaunch NATO membership bid

    Read more

  • France shines in IMF list of world’s promising economists

    Read more

  • Mapping Ukraine: Canada and Russia in ‘tweet for tat’ row

    Read more

  • Obama has 'no strategy yet' on potential Syria strikes

    Read more

  • Netflix to woo French with ‘House of Cards’ set in Marseille

    Read more

  • French businesses ‘hoping for a new Thatcher’

    Read more

  • Syrian refugees surpass 3 million, UN says

    Read more

  • West backs Ukrainian claims of Russian incursion

    Read more

  • Libyan PM resigns as Islamists set up rival administration

    Read more

  • UN says 43 peacekeepers captured in Golan Heights

    Read more

  • The deleted tweets of Manuel Valls

    Read more

  • Peru seizes record 6.5 tonnes of Europe-bound cocaine

    Read more

  • Pakistan army to mediate between PM, protesters

    Read more

  • PSG face Barcelona, Ajax in tough Champions League draw

    Read more

  • In pictures: Billions of locusts invade Madagascan capital

    Read more

  • Brad Pitt and Angelina Jolie say ‘I do’ in France

    Read more

Americas

World stocks falter on fears of only 'modest' US recovery

Video by Gaëlle Faure

Text by News Wires

Latest update : 2010-08-12

Markets in Asia and Europe mostly fell on Thursday following a Federal Reserve warning a day before that the US recovery would be "modest" as well as gloomy growth forecasts from both China and the Bank of England.

AP - World stock markets mostly fell again Thursday, though the selling pressure paled in comparison with the rout the previous day when investors were unnerved by downbeat economic news and the Federal Reserve’s warning that the U.S. economy is not growing as fast as anticipated.
 
In Europe, Germany’s DAX closed down 18.90 points, or 0.3 percent, to 6,135.17, while the CAC-40 in France fell 7.22 points, or 0.2 percent, at 3,621.07. However, the FTSE 100 index of leading British shares ended 20.85 points, or 0.4 percent, higher at 5,266.06.
 
On Wall Street, the Dow Jones industrial average was down 44.20 points, or 0.4 percent, at 10,334.63 around midday New York time, while the broader Standard & Poor’s 500 index fell 4.85 points, or 0.5 percent, to 1,084.62.
 
The falls are less than half the declines recorded on Wednesday, when fears about the global economic recovery stalked markets following the Fed’s warning and disappointing Chinese consumption data. That selling pressure continued into the Asian trading day, with most of the continent’s main markets down around 1 percent at the close.
 
“Overall the market mood has turned subdued since Tuesday as investors become risk adverse, unable to ignore the plethora of poor data that has started to overhang the world economy,” said Phil Gillett, a trader at Spreadex.
 
Whether the mood turns around could well hinge on U.S. retail sales figures for July on Friday _ the consensus in the markets is that they rose a monthly 0.4 percent.
 
U.S. retail sales are particularly important because they shine a light on the state of consumption, a key driver of growth. U.S. retail spending accounts for around 70 percent of the world’s largest economy. The consensus in the markets is that they rose a monthly 0.4 percent.
 
“Retail sales data out of the U.S. are going to be closely watched to see if they can counter the pessimism that has hit sentiment in the last couple of days,” said David Jones, chief market strategist at IG Index.
 
The impact of the deteriorating economic picture isn’t just felt in shares, though.
 
In this case, the dollar has recovered its poise after a month of selling as it shines in its status as one of the world’s leading safe haven assets. Its capacity as the world’s number one reserve currency more than offsets worries about the U.S. economy’s prospects or that interest rates are likely to stay lower for longer than previously expected.
 
It’s been particularly strong against the euro, which plunged around 3 cents on Wednesday.
 
By late afternoon London time, the euro was up 0.1 percent on the day at $1.2853, its fortunes little helped by an unexpected 0.1 percent decline in the euro area’s industrial output in June and the news that Greece’s economy shrank by a greater than anticipated 1.5 percent in the second quarter of the year.
 
Those figures came a day ahead of wider economic growth figures for the whole 16-country eurozone. They are expected to show that the eurozone economy grew by a quarterly rate of around 0.6 percent.
 
Neil Mellor, a currency strategist at Bank of New York Mellon, said that the dollar’s recovery against the euro may, at first glance, appear to be “rather surprising” given that the Fed has effectively rubber-stamped the market’s view on U.S. interest rates _ they aren’t going to go up anytime soon.
 
He said “the answer is possibly to be found in the eurozone debt markets themselves,” which have been fairly quiet of late after six months of turmoil nearly brought the whole single currency project to its knees. Following a bailout of Greece and a wider support package for other eurozone members, European government bond markets have settled down.
 
However, Mellor noted that in the course of the last week, some jitters have returned, and the spread between the interest rates on 10-year bonds from the periphery countries _ Greece, Ireland, Spain and Portugal _ and those of Germany have started to widen again.
 
The dollar has also recovered slightly against the yen, though the Japanese currency is also considered a safe haven.
 
By late afternoon London time, the dollar was up 0.7 percent at 85.83 yen.
 
On Wednesday, it had fallen to a 15-year low of 84.75 yen.
 
The recent strength of the yen has been hitting Japanese stocks hard over the last few weeks, as investors worry about the potential negative impact on Japan’s exporters.
 
The benchmark Nikkei 225 stock average closed down 80.26 points, or 0.9 percent, to 9,212.59.
 
South Korea’s Kospi dived 2.1 percent to 1,721.75, Australia’s S&P/ASX 200 fell 1.2 percent to 4,400.90 and Hong Kong’s Hang Seng retreated 0.9 percent to 21,105.71.
 
The Shanghai Composite Index dropped 0.7 percent to a two-week low of 2,575.48.
 
Worries about the global economy have also hit oil markets hard over the last few days, with a barrel of oil down around $5 this week. Benchmark crude for September deliver was down $1.54 at $76.48 in electronic trading on the New York Mercantile Exchange. The contract slid $2.23 to settle at $78.02 on Wednesday.

Date created : 2010-08-12

  • USA

    Fed pledges more stimulus spending, says recovery slow

    Read more

COMMENT(S)