Global Stocks Slide After Fed Sparks Investor Concerns
11 February 2016 - 9:00PM
Dow Jones News
Global stocks staged a sharp retreat Thursday as a cautious tone
from the Federal Reserve and a fresh fall in oil prices fueled
anxiety about the health of the world economy.
The Stoxx Europe 600 was down 3.5% in early trade as banking and
mining shares tumbled.
Investors also shed stocks in Asia and piled into havens such as
gold and government bonds, while the yen gained against the
dollar.
Federal Reserve Chairwoman Janet Yellen on Wednesday highlighted
risks to growth and inflation that could delay the central bank's
plans for raising rates.
"Financial conditions in the United States have recently become
less supportive of growth, with declines in broad measures of
equity prices, higher borrowing rates for riskier borrowers, and a
further appreciation of the dollar," she said.
Wall Street gave up early gains after Ms. Yellen's testimony to
end lower for a fourth consecutive day.
Stock futures pointed to a 1.7% opening loss for the S&P
500. Changes in futures don't necessarily reflect market moves
after the opening bell.
Ms. Yellen's statements "do not appear to take all of 2016 off
the table [for rate rises], but perhaps moderate expectations,"
said Bill Northey, chief investment officer at the Private Client
Group at U.S. Bank.
In Europe, banking shares fell over 5% after a brief bout of
relief in the previous session, taking losses for the year to
28%.
French bank Socié té Gé né rale SA on Thursday reported a jump
in net profit, but warned that it may fall short of its
profitability target this year. Shares were down 9.2%.
The basic-resources sector also fell sharply after mining giant
Rio Tinto PLC swung to an annual loss and scrapped its progressive
dividend policy amid a sharp downturn in commodity prices. Shares
in the miner were down 7.7%.
Rallies in global stocks this year have been short-lived amid
uncertainty around central-bank policy, global growth, China's
currency and the oil price.
Brent crude oil was last down 1.8%% at $30.30, while WTI crude
futures fell 2% to $26.89, despite a drawdown in U.S.
stockpiles.
Recent falls in oil prices have fueled concerns among investors
about the strength of the global economy, as well as possible
spillover effects from bankruptcies in the energy sector and
declines in energy-dependent economies.
Earlier, Hong Kong's Hang Seng Index fell 3.9%, catching up with
the week's selloff as the market reopened from a holiday.
Japan's Nikkei Stock Average and China's Shanghai Composite
Index were both closed, but investors continued to pile into the
yen, which tends to rise in times of market stress. The dollar was
down 0.9% against the yen at ¥ 112.3250, near its lowest since
October 2014.
The euro was up 0.12% against the euro at $1.1296.
As investors sought safety, spot gold in London gained 0.4% to
$1210.45 a troy ounce, its highest level since May.
The yield on 10-year German government bonds fell around 0.06
percentage point to 0.185%, according to Tradeweb, while the yield
on 10-year U.S. Treasurys fell around 0.04 percentage point to
1.662%. Yields rise as prices fall.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
February 11, 2016 04:45 ET (09:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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