LONDON: Stocks worldwide tumbled on Friday after weak economic data from China and Europe fanned concerns of a global economic slowdown and left investors fretting over the wider impact of a still-unresolved Sino-U. S.
The MSCI All-Country World Index, which tracks stocks across 47 countries, was down over half a per cent by afternoon in Europe. Futures indicated a weak open on Wall Street.
Eurozone business ended the year on a weak note, expanding at the slowest pace in over four years as new order growth all but dried up, hurt by trade tensions and violent protests in France, a survey showed.
Another survey showed French business activity plunged unexpectedly into contraction this month, retreating at the fastest pace in over four years in the face of violent antigovernment protests.
Germany’s private sector expansion slowed to a four-year low, meanwhile, suggesting growth in Europe’s largest economy may be weak in the final quarter.
The data out of Europe added to weak readings from China, where November retail sales grew at the weakest pace since 2003 and industrial output rose the least in nearly three years, underlining risks to the economy as Beijing works to defuse a trade dispute with the United States.
Stock markets in Europe fell sharply, with Germany’s DAX index falling by as much as 1-1/2 per cent. It was last down 0.8 per cent. The pan-European STOXX 600 index was last down 0.8 per cent, after falling over 1 per cent earlier.
“The data this morning out of France really hasn’t helped the mood. You look at China data, you look at the flash PMIs out of France and Germany and they’ve really sort of reinforced concerns that the global economy is slowing down,” said Michael Hewson, chief markets analyst at CMC Markets in London.
“Ultimately, I think it rather questions the wisdom of the ECB ending its asset purchase programme at the end of this month. You’ve got Mario Draghi basically tightening into a downturn.” MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.5 per cent. Japan’s Nikkei, also dragged down by the country’s weak tankan sentiment index, dropped 2.0 per cent.
China’s benchmark Shanghai Composite and the blue-chip CSI 300 closed down 1.5 per cent and 1.7 per cent, respectively, and Hong Kong’s Hang Seng was off 1.5 per cent.
A Chinese statistics bureau spokesman said the November data showed downward pressure on the economy is increasing.
“The market’s softer after Chinese retail sales. They’re still quite stellar growth, they were lower than expected and enough to concern the market,” said Edward Park, investment director at Brooks Macdonald.
The Chinese yuan weakened 0.4 per cent to 6.9020 per dollar in offshore trade following the data.
Overnight on Wall Street, the S&P 500 ticked down 0.02 per cent to 2,650, not far from its 6-1/2-month closing low of 2,633 touched on Nov. 23, while the Nasdaq Composite dropped 0.39 per cent.
US corporate earnings due next month could throw a spotlight on the impact from the US tariffs on imports from China, while there is risk of a government shutdown and further political stalemate in a divided US congress, Kuramochi added.
In the currency market, the euro was down 0.7 per cent after the weak PMIs, last changing hands at $1.1293.
Sterling fell more than half a per cent to below $1.26 after Prime Minister Theresa May returned from a visit to Brussels, where she failed to win assurances from European Union leaders over her Brexit withdrawal agreement.
The European Union has said the agreed Brexit deal is not open for renegotiation even though its leaders on Thursday gave May assurances that they would seek to agree a new pact with Britain by 2021 so that the contentious Irish “backstop” is never triggered.
The dollar stood at 113.61 yen, down 0.1 per cent on the day but above this week’s low of 112.245 set on Monday.
Oil prices fell after China reported slower economic growth, pointing to lower fuel demand in the world’s biggest oil importer, although market sentiment was supported by supply cuts agreed last week by major crude producers.
US crude futures fell 0.7 per cent to $52.22 per barrel and Brent crude slid 0.8 per cent to $60.94, after both gained more than 2.5 per cent on Thursday.
Cryptocurrency Bitcoin fell as low as $3,200, a fresh 15-month low.
A rash of bomb threats were emailed on Thursday to hundreds of businesses, public offices and schools across the United States and Canada demanding payment in cryptocurrency, but none of the threats appeared credible, law enforcement officials said.