World stock markets suffer heavy losses
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Pastor Dale Morgan
Jun 23, 2011, 3:50:00 PM6/23/11
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World stock markets suffer heavy losses
Poor economic news from US, China, UK and eurozone push shares down sharply, while $8 is wiped off oil price
* Graeme Wearden
* guardian.co.uk, Thursday 23 June 2011 15.59 BST
U.S.-WASHINGTON-ECONOMY-BERNANKE
Ben Bernanke, chairman of the US Federal Reserve, has warned that the US economy is expected to grow more slowly than expected in 2011. Photograph: Lin Yu/Xinhua Press/Corbis
World stock markets suffered another bout of heavy losses on Thursday, driven down by fears over the eurozone debt crisis and fresh evidence that global economic growth is faltering.
A flood of poor economic news from the US, China, the UK and the eurozone helped to push shares down sharply, and send the euro to record lows. The oil price also slumped, wiping more than $8 off the cost of a barrel of Brent crude at one point, as extra supplies were released in an effort to prevent the world economy stagnating.
In London the FTSE 100 shed more than 100 points in afternoon trading to 5666, a fall of more than 1.7%. Wall Street also saw early losses, with the Dow Jones losing 1.8% when trading began to 11,889 points. Across Europe, equity markets were also in retreat as European leaders met in Brussels to discuss creating a new rescue package for Greece.
Ben Bernanke, chairman of the Federal Reserve, set the early direction with his warning on Wednesday night that the US economy would grow more slowly than expected in 2011, and again next year. Jean-Claude Trichet, head of the European Central Bank, raised the stakes by warning that risk signals for financial stability across the eurozone were flashing "red".
"Everyone is running away from any sort of risk today," explained David Jones, chief market strategist at IG Index. "The big cloud is Greece, but every day something else comes along [to knock confidence]."
Reports from America that talks to raise the US debt ceiling had collapsed also alarmed traders.
The euro lost nearly two cents against the dollar, touching a low of $1.4133. The pound also took a pummelling in the foreign exchange markets, falling by more than one cent against the dollar to $1.594. Economists said that the minutes of the Bank of England's last meeting, released on Wednesday, had shown that Threadneedle Street was taking a more dovish approach to monetary policy. UK interest rates may now not rise until 2012.
The weak state of the UK economy was highlighted by the CBI's monthly snapshot of the retail sector. For the first time since June 2010, more retailers said that business was deteriorating than those who said it was improving.
"After a year of growth, high street sales volumes fizzled out in June," said Judith McKenna, chair of the CBI's distributive trades panel. "Consumers are really feeling the pinch as disposable incomes continue to be squeezed by rising prices and weak earnings growth."
In America, the number of new jobless claims rose by 9,000 to 429,000, confounding expectations of a weekly fall to 415,000.
China reported that its manufacturing output has barely grown so far in June, an indication that economic growth may have slowed significantly in recent weeks. This was followed by data from the eurozone, where manufacturing and services output slowing sharply to a 20-month low in June.
"Tighter fiscal policy is increasingly kicking in across the region, the ECB has started raising interest rates and sovereign debt tensions have intensified, centred on Greece's woes," said Howard Archer of IHS Global Insight.
The oil price fell after the International Energy Agency announced that it would release 60m barrels of oil on to the market, at a rate of 2m barrels per day.
The move was criticised by members of the Opec cartel, who called the move unjustifiable. The cost of a barrel of Brent crude fell as low as $105.72, down more than $8, while US crude dropped to $90 a barrel.
World stock markets suffer heavy losses
Poor economic news from US, China, UK and eurozone push shares down sharply, while $8 is wiped off oil price
* Graeme Wearden
* guardian.co.uk, Thursday 23 June 2011 15.59 BST
U.S.-WASHINGTON-ECONOMY-BERNANKE
Ben Bernanke, chairman of the US Federal Reserve, has warned that the US economy is expected to grow more slowly than expected in 2011. Photograph: Lin Yu/Xinhua Press/Corbis
World stock markets suffered another bout of heavy losses on Thursday, driven down by fears over the eurozone debt crisis and fresh evidence that global economic growth is faltering.
A flood of poor economic news from the US, China, the UK and the eurozone helped to push shares down sharply, and send the euro to record lows. The oil price also slumped, wiping more than $8 off the cost of a barrel of Brent crude at one point, as extra supplies were released in an effort to prevent the world economy stagnating.
In London the FTSE 100 shed more than 100 points in afternoon trading to 5666, a fall of more than 1.7%. Wall Street also saw early losses, with the Dow Jones losing 1.8% when trading began to 11,889 points. Across Europe, equity markets were also in retreat as European leaders met in Brussels to discuss creating a new rescue package for Greece.
Ben Bernanke, chairman of the Federal Reserve, set the early direction with his warning on Wednesday night that the US economy would grow more slowly than expected in 2011, and again next year. Jean-Claude Trichet, head of the European Central Bank, raised the stakes by warning that risk signals for financial stability across the eurozone were flashing "red".
"Everyone is running away from any sort of risk today," explained David Jones, chief market strategist at IG Index. "The big cloud is Greece, but every day something else comes along [to knock confidence]."
Reports from America that talks to raise the US debt ceiling had collapsed also alarmed traders.
The euro lost nearly two cents against the dollar, touching a low of $1.4133. The pound also took a pummelling in the foreign exchange markets, falling by more than one cent against the dollar to $1.594. Economists said that the minutes of the Bank of England's last meeting, released on Wednesday, had shown that Threadneedle Street was taking a more dovish approach to monetary policy. UK interest rates may now not rise until 2012.
The weak state of the UK economy was highlighted by the CBI's monthly snapshot of the retail sector. For the first time since June 2010, more retailers said that business was deteriorating than those who said it was improving.
"After a year of growth, high street sales volumes fizzled out in June," said Judith McKenna, chair of the CBI's distributive trades panel. "Consumers are really feeling the pinch as disposable incomes continue to be squeezed by rising prices and weak earnings growth."
In America, the number of new jobless claims rose by 9,000 to 429,000, confounding expectations of a weekly fall to 415,000.
China reported that its manufacturing output has barely grown so far in June, an indication that economic growth may have slowed significantly in recent weeks. This was followed by data from the eurozone, where manufacturing and services output slowing sharply to a 20-month low in June.
"Tighter fiscal policy is increasingly kicking in across the region, the ECB has started raising interest rates and sovereign debt tensions have intensified, centred on Greece's woes," said Howard Archer of IHS Global Insight.
The oil price fell after the International Energy Agency announced that it would release 60m barrels of oil on to the market, at a rate of 2m barrels per day.
The move was criticised by members of the Opec cartel, who called the move unjustifiable. The cost of a barrel of Brent crude fell as low as $105.72, down more than $8, while US crude dropped to $90 a barrel.
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