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TEHRAN, October 23 - World shares slid towards their lowest level in a year on Tuesday, as negative drivers from fatigued earnings and Saudi Arabia’s diplomatic isolation to a brewing spat over Italy’s finances piled on the pressure.
TEHRAN, Young Journalists Club (YJC) -World shares slid towards their lowest level in a year on Tuesday, as negative drivers from fatigued earnings and Saudi Arabia’s diplomatic isolation to a brewing spat over Italy’s finances piled on the pressure.
Wall Street looked set to for another jolt lower when it reopens [.N] but it was heavy selloffs in both Asia and Europe [.SS][.T], which was heading for a fifth day of uninterrupted falls, that did the main damage. [.EU]
The tech sector posted the worst performance after Swiss-listed chipmaker AMS plunged 25 percent as its outlook triggered alarm bells, but there was a broader force at play.
The pan-European STOXX 600 was near a two-year low with almost half of its stocks now in bear-market territory — down 20 percent from their peak.
Germany’s DAX dropped to late 2016 lows, MSCI’s world share index was just two points of a one-year low while Wall Street’s S&P 500 was set to test the lower limits of its 200-day moving average again. [.N]
“This is quite an important period now because we have tried to rally a few times and haven’t really managed it,” said Natwest Markets’ head of global strategy James McCormick.
There has been a spike in U.S. bond yields similar to earlier in the year, “but the macro picture for equities is more challenging now,” he added, pointing to fading synchronization in global growth as well a stronger dollar.
That strength kept the euro pinned near a two-month low at $1.146 before a European Commission meeting that could see Brussels take the unprecedented step of demanding changes to Italy’s recently laid out budget plans.
Italian bond traders were biding their time amid reports of some conciliatory moves from Rome’s coalition but the spat has also bred doubts about the European Central Bank plans to possibly raise its interest rates next year.
Questions about the future of Britain’s prime minister, mired in a stalemate over Brexit, relented just a enough to help sterling claw higher but the mood remained distinctly ‘risk off’ regardless.
That helped strengthen the safe-haven Japanese yen and Swiss franc while higher-yielding currencies like the Australian and New Zealand dollars fell.
“The prospect of a normalisation of (ECB) monetary policy was the main reason why the euro was able to appreciate over the past year. However, there is a rising risk that this support is now going to crumble,” Commerzbank analyst Thu Lan Nguyen said.
Source: Reuters
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