Euro­pean stocks ex­tend losses, Asia down

Kuwait Times - - BUSINESS -

LON­DON: Euro­pean stock mar­kets fell for a sec­ond day run­ning yes­ter­day as more weak Chi­nese data added to con­cerns about a loom­ing US rate hike. China’s con­sumer price in­dex read­ing-the weak­est since May-comes days af­ter Bei­jing data showed a sharp fall in im­ports and ex­ports, adding to wor­ries about the growth slow­down in the world’s sec­ond largest econ­omy.

Of­fi­cials said prices rose 1.3 per­cent last month, down from 1.6 per­cent year-on-year in Septem­ber.

“A key fea­ture of global eco­nomic de­vel­op­ments since the 2007 cri­sis has been the ab­sence of in­fla­tion in the ma­jor economies,” VTB Cap­i­tal econ­o­mist Neil MacKin­non said yes­ter­day.

“This re­flects a num­ber of fac­tors, but can mostly be at­trib­uted to weak global de­mand and ex­cess sup­ply.” In late morn­ing deals, Lon­don’s bench­mark FTSE 100 in­dex fell 0.3 per­cent, Frankfurt’s DAX 30 lost 0.4 per­cent and the CAC 40 in Paris shed 0.3 per­cent com­pared with Mon­day’s close. Traders are mean­while betting on the US cen­tral bank tight­en­ing mone­tary pol­icy in De­cem­ber de­spite broad weak­ness across the global econ­omy. “If the Fed is go­ing for a rate hike in De­cem­ber many in­vestors will now be cau­tious about buy­ing into eq­ui­ties,” ADS Se­cu­ri­ties mar­ket strate­gist Nour Al-Ham­moury.

“Yes­ter­day, Euro­pean and US mar­kets re­acted to the in­crease chance of the hike, all fall­ing by around 1.0 per­cent.” In­creased prospects of a US rate hike, fol­low­ing much bet­ter-thanex­pected US jobs data on Fri­day, has mean­while boosted the dol­lar’s at­trac­tive­ness that saw it reach six-month highs against the euro on Fri­day. In the euro-zone’s sec­ond big­gest econ­omy France, econ­omy min­is­ter said his coun­try’s econ­omy is “lack­lus­ter” and will prob­a­bly re­main so in 2016.

“There is a world­wide de­mand prob­lem to­day and there is only a sin­gle en­gine left run­ning”, the US econ­omy, Em­manuel Macron told Europe 1 ra­dio.

“Any good news will not come from abroad,” he said. Macron said France needed to ac­cel­er­ate eco­nomic re­forms and he called for a “much stronger in­vest­ment pol­icy in Europe” to rekin­dle growth on the con­ti­nent. On the cor­po­rate front yes­ter­day, shares in Voda­fone rose 4.7 per­cent to 224.60 pence in Lon­don af­ter the Bri­tish mo­bile phone giant an­nounced a rise in quar­terly rev­enues, boost­ing the com­pany’s for­tunes as its ri­vals pre­pare for mega tie-ups.

Asia drops

A fur­ther slow­down in Chi­nese in­fla­tion com­pounded wor­ries about the world’s num­ber-two econ­omy yes­ter­day, adding to sell­ing pres­sure in Asian mar­kets and ex­tend­ing a global re­treat as talk of a De­cem­ber US in­ter­est rate hike in­creases.

The below-fore­cast read­ing on China’s con­sumer price in­dex-the weak­est since May-comes days af­ter Bei­jing data showed a sharp fall in im­ports and ex­ports, and is the lat­est in a string of re­ports point­ing to a growth slow­down in the coun­try.

Of­fi­cials said prices rose 1.3 per­cent last month, down from 1.6 per­cent year-on-year in Septem­ber. Also, the pro­ducer price in­dex, a mea­sure of fac­tory gate prices, fell 5.9 per­cent-match­ing the pre­vi­ous two months and mark­ing a six-year low.

The news will add to pres­sure on Bei­jing as it strug­gles to trans­form the na­tion’s growth model to a more sta­ble one driven by do­mes­tic con­sump­tion and away from decades of ex­port re­liance and state in­vest­ment. Liu Li-Gang, the chief Greater China econ­o­mist at Aus­tralia & New Zealand Bank­ing Group in Hong Kong, said the lat­est data “re­quires the (Peo­ple’s Bank of China) to en­gage in more ag­gres­sive pol­icy eas­ing”.

It also brought an end to a five-day rally in Shang­hai, which had been boosted Mon­day by news that au­thor­i­ties will re­sume ini­tial pub­lic of­fer­ings this month af­ter a four-month hia­tus caused by the sum­mer stock rout.

The mar­ket ended 0.2 per­cent downalthough it pared early hefty losses and Hong Kong dropped 1.4 per­cent, while Syd­ney, where sev­eral firms that rely on Chi­nese trade are listed, closed 0.4 per­cent lower. How­ever, there was some respite for emerg­ing mar­ket cur­ren­cies, which edged up slightly af­ter be­ing ham­mered Mon­day by last week’s bet­ter-than-ex­pected US jobs data that ramped up ex­pec­ta­tions of a Fed rate rise next month. — Agen­cies

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.