Market Buzz: Focus on global growth, US Fed plans
On Thursday analysts expect Russian floors to open with moderate gains as buybacks of the biggest Wednesday losers occur. However with negative international sentiment and stalled oil prices, the market is likely to slip later in the day.
On Wednesday the Russian floors slumped to 1360 points area. The MICEX ended the day at 1361.43, losing 2.6 percent, while the RTS closed at 1360.06 short of 2.8 percent. Equities of Russia’s major natural gas company Gazprom slipped to a four-year-low, setting a new anti-record, while the shares of Russia’s biggest bank – Sberbank – fell lower than 100 rubles ($3) per share.
European stock markets also retreated on Wednesday. Investors’ sentiment was affected by global news, which pointed to weak growth and rising bond yields.
The losses came after the Organization of Economic Cooperation and Development and the IMF lowered their global growth forecasts. The International Monetary Fund cut its 2013 growth outlook for China to “around 7.75 percent”, against previous estimates of 8.0 percent in the world’s second-biggest economy this year.
Meanwhile the OECD cut its growth forecast for the world’s leading economies, except Japan. The organization however noted that growth should pick up later this year. Unemployment in Germany increased in seasonally adjusted terms in May, but the labor market is continuing to hold up relatively well to the eurozone debt crisis, official data showed on Wednesday.
On growing concerns with global growth, shares in most European markets fell. London's FTSE 100 index of leading companies lost 1.99 percent to 6,627.17 points. In Frankfurt the DAX 30 lost 1.7 percent to close at 8,336.58 points, and in Paris the CAC 40 dropped 1.89 percent to 3,974.12 points. Stocks in Milan dropped 1.61 percent, while Madrid slid 0.82 percent.
Concerns with global economic growth and ongoing uncertainty of the US Federal Reserve's plans for unwinding its bond-buying program sent the US stocks downwards Wednesday.
The Dow Jones Industrial Average fell 0.68 percent to close at 15,304.64. The broad-based S&P 500 slid 0.7 percent ending at 1,648.50. The NASDAQ Composite dropped 0.61 percent to 3,467.52.
On Thursday investors will be eyeing US’ revised data on first quarter economic growth, in addition to the weekly report on initial jobless claims and data on home sales.
Most Asian markets fell Wednesday on growing concerns that the Fed will be withdrawing its aggressive stimulus program soon. Japan's Nikkei 225 index fell 2.8 percent to 13,932.92. Hong Kong's Hang Seng lost 0.2 percent to 22,518.85. Australia's S&P/ASX 200 dropped 1.5 percent to 4,900.90. Benchmarks in Singapore, Taiwan, Indonesia, and the Philippines also fell. South Korea’s Kospi rose adding 0.2 percent to 2,005.99.
Already on Friday Japan is expected to release official data on household spending and inflation as well as preliminary data on industrial production, a leading economic indicator.
Oil prices have stalled, showing little movement this week. Brent is currently trading 0.2 percent higher at $102.6, while WTI is 0.04 percent lower trading at $93.
