Global stocks drop on weak eco­nomic data, lower oil

The Pak Banker - - MARKETS/SPORTS -

World stock mar­kets cooled on Fri­day fol­low­ing lack­lus­ter Euro­pean and US eco­nomic data and a drop in oil prices af­ter the Saudi Ara­bia ruled out a pro­duc­tion cut.

Sellers re­versed much of Mon­day's gains, as mar­kets con­tin­ued to show a lack of con­fi­dence in the global econ­omy.

Lon­don's bench­mark FTSE 100 in­dex closed 1.2 per­cent lower, Paris' CAC 40 lost 1.4 per­cent and the DAX 30 in Frank­furt shed 1.6 per­cent. The US S&P 500 fell 1.3 per­cent.

Mar­kets were on the back foot af­ter a closely-watched re­port rated Ger­man busi­ness con­fi­dence in Fe­bru­ary at the low­est level since De­cem­ber 2014.

"The ma­jor­ity of com­pa­nies were pes­simistic about their busi­ness out­look for the first time in over six months," said the Ifo eco­nomic in­sti­tute, with man­u­fac­tur­ers in par­tic­u­lar voic­ing deep con­cerns.

That was fol­lowed by the Con­fer­ence Board re­port that the US con­sumer con­fi­dence in­dex slumped to 92.2 in Fe­bru­ary from 97.8 in Jan­uary, with as­sess­ments of both the present sit­u­a­tion and the ex­pected sit­u­a­tion in six months both de­clin­ing.

Adding to the news, Saudi oil min­is­ter Ali Al Naimi touted an ef­fort among ma­jor oil pro­duc­ers to agree to freeze out­put, but shut the door on a pro­duc­tion cut.

Naimi, speak­ing at a Hous­ton en­ergy con­fer­ence, said freez­ing out­put was more re­al­is­tic than cut­ting be­cause "not many coun­tries are go­ing to de­liver, even if they say they will cut pro­duc­tion." Oil fin­ished down more than four per cent. "Over­all we con­tinue to see mar­kets which are more or less mov­ing in line with move­ments in com­mod­ity prices," said David Levy, port­fo­lio man­ager at Re­pub­lic Wealth Ad­vi­sors.

En­ergy and me­tals suf­fered es­pe­cially large de­clines, with the miner An­glo Amer­i­can fall­ing 6.3 per cent, US oil gi­ant Chevron shed­ding 4.4 per cent and French steel­maker ArcelorMit­tal fall­ing 4.5 per cent. Bank­ing shares were bat­tered af­ter Dow mem­ber JPMor­gan Chase dis­closed plans to set aside an ad­di­tional $600 mil­lion to cover po­ten­tial loan de­faults in the en­ergy and min­ing sec­tor, and could re­serve an­other $1.5 bil­lion if con­di­tions worsen.

JPMor­gan lost 4.2 per cent, while Bank of Amer­ica, Cit­i­group and Euro­pean fi­nan­cial ti­tans like BNP Paribas and Deutsche Bank lost be­tween two and four per­cent.

Dow mem­ber United Tech­nolo­gies fell 0.8 per cent fol­low­ing its state­ment that it halted merger talks with Honey­well due to "in­sur­mount­able reg­u­la­tory ob­sta­cles and strong cus­tomer op­po­si­tion" that would make a com­bi­na­tion im­pos­si­ble. Honey­well fell 0.9pc.

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