Equities shaken by global growth worries

Apr 16 2013 11:51

Bangkok - World stock markets were mostly lower on Tuesday as weak economic data, falling commodity prices and big losses on Wall Street shook investors. A deadly bombing in the US also rattled confidence.

The sell-off in markets was triggered by the Chinese government's report on Monday that growth in the world's second-largest economy slowed to 7.7% in the first quarter from 7.9% in the final quarter of last year. Growth was expected to accelerate slightly to 8%.

The report stoked worries about the strength of China's economy at a time when US economic data has disappointed and Europe remains embroiled in its government debt crisis. It also pummeled oil and commodity prices.

A bombing at the finish line of the Boston Marathon that appeared timed for maximum casualties further fanned anxiety. Three people were killed and more than 140 injured. No one has claimed responsibility.

"China GDP data spooked investors into thinking that the world's second largest economy is slowing at a faster rate than anticipated," said Evan Lucas of IG Markets in Melbourne. "All these gyrations on commodity and currency markets were compounded further by the dreadful events in Boston."

Lucas said the markets were probably overreacting to the China growth news, but it creates a disquieting picture when coupled with last week's trade data showing some weakness in the country's exports.

European stocks fell in early trading. Britain's FTSE fell 0.7% to 6,302.38. Germany's DAX lost 0.8% to 7,652.29. France's CAC-40 fell 0.7% to 3,683.78. But US markets appeared ready for a comeback, with Dow Jones industrial futures rising 0.4% to 14,563. S&P 500 futures rose 0.4% to 1,548.90.

In Asia, Japan's Nikkei fell 0.4% to close at 13,221.44. Hong Kong's Hang Seng lost 0.5% to 21,672.03. South Korea's Kospi opened lower but ended 0.1% higher at 1,922.21. Australia's S&P/ASX 200 shed 0.3% to 4,950.80. Benchmarks in mainland China and India rose, while New Zealand and the Philippines fell.

On top of the disappointing data from China were figures on Monday showing a drop in US homebuilder confidence. A separate report showed weak manufacturing in the Northeast. On Friday, the Commerce Department said retail sales fell 0.4% in March from the previous month, reinforcing views that the US recovery is losing some steam. The negative news pummeled Wall Street on Monday, its worst day of the year.

Gold-linked shares across the region fell following steep drops in the precious metal's price. Hong Kong-listed Zijin Mining Group, China's biggest gold miner, fell 1.7%. In Australia, Kingsgate Consolidated tumbled 5.4% and Newcrest Mining fell 5.1%.

Korean Air Lines, South Korea's flagship carrier, sank 7%. Enthusiasm for airline shares has been damped by threatening rhetoric from North Korea in recent days.

The sharp decline in gold and fears about global growth reverberated throughout commodity markets. Benchmark oil for May delivery fell $1.01 to $87.70 per barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $2.58, to finish at $88.71 a barrel on Monday.

In currencies, the euro rose slightly to $1.3047 from $1.3036 late on Monday in New York. The dollar rose to ¥97.64 from ¥97.18.

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

commodities  |  markets



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about: MINI BUDGET

Finance Minister Malusi Gigaba has laid bare South Africa's economic woes. Visit our Mini Budget Special for all the action.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Free education in South Africa is:

Previous results · Suggest a vote