Global stocks slumped further Tuesday as soaring Chinese inflation fanned fears of a new sharp economic slowdown while investors looked in hope for fresh assurances from the US Federal Reserve.
European shares were sliding in midday trade after Asia suffered massive losses, a day after global equities had plummeted on mounting growth and debt strains and ahead of the Fed's latest monetary policy announcements due Tuesday.
Gold prices hit fresh historic highs, the dollar fell against the euro and yen, government bond yields eased and oil futures slumped, as investors waited to see if the US central bank would announce more economic stimulus measures.
At about 1100 GMT, London's benchmark FTSE 100 index was down 1.90 per cent, off much sharper losses of 5.5 per cent in early trade, but remained below 5,000 points for the first time in more than a year.
Traders also reacted to weak British industrial output data and rioting in London, which some analysts are blaming on the government's austerity drive.
'As if the issues of eurozone debt, the US deficit and downgrade and stalling growth were not enough to create a mountain of angst, pictures of London ablaze and Syria in virtual civil war reminds us how close we are to severe social disruption... adding further to uncertainty and gloom,' said David Hufton, an analyst at brokers PVM Oil Associates.
Elsewhere in Europe, the Frankfurt stock market was down 3.24 per cent, Paris shed 1.20 per cent, while Madrid and Milan reversed opening gains to fall around 1.0 per cent in afternoon deals.
Gold, seen as a safe investment in troubled economic times, hit a fresh record high above $1,780 an ounce.
'It's possible that markets are starting to slowly share a similar view to ours that the Western World financial system built over the last two to three decades might be totally unsustainable,' Deutsche Bank analysts said in a note.
'Such a realisation could be cataclysmic for markets and would challenge everything the vast majority of financial market participants have come to take for granted over the course of their careers,' they added.
Markets continued to plunge despite a pledge Monday from the G20 group of the world's most top economies to bolster the global economy.
China, the world's second biggest economy, said Tuesday that its inflation rate rose in July to 6.5 per cent, the highest level since June 2008 when it reached 7.1 per cent.
Some analysts are concerned Beijing might go too far in tightening monetary policy and trigger a sharp slowdown in the Chinese economy — which could have dire consequences around the globe — as it seeks to keep rising prices in check.
'Equity markets are fearing a double-dip recession,' said Louise Cooper, an analyst at BGC Partners in London.
'Economic growth can be affected by share price falls because essentially it makes businesses fearful for the future. And it affects ordinary people as well if your pension fund that you may have spent 10 or 20 years saving for has effectively gone down 10% or 20% in days.'
US stocks plummeted more than five per cent on Monday after Standard & Poor's dealt the United States an unprecedented credit downgrade.
S&P lowered the US long-term sovereign debt rating from AAA to AA+ after markets closed Friday, citing Washington's inability to rein in its mounting deficits.
In Asia on Tuesday, the Tokyo stock market closed down 1.68 per cent, Hong Kong dived 5.66 per cent, Seoul lost 3.63 per cent but Sydney gained 1.22 per cent.
Source : New Age
No comments:
Post a Comment