World stocks tumble on weak economic data
from China and Europe
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[December 14, 2018]
By Ritvik Carvalho
LONDON (Reuters) - 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. trade dispute.
The MSCI All-Country World Index, which tracks stocks across 47
countries, was down half a percent.
Euro zone 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 anti-government 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
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 opened sharply lower, with Germany's DAX index
falling 1-1/2 percent. The pan-European STOXX 600 index was down 1.3
"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 program 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
percent. Japan's Nikkei, also dragged down by the country's weak tankan
sentiment index, dropped 2.0 percent.
China's benchmark Shanghai Composite and the blue-chip CSI 300 closed
down 1.5 percent and 1.7 percent, respectively, and Hong Kong's Hang
Seng was off 1.5 percent.
A Chinese statistics bureau spokesman said the November data showed
downward pressure on the economy is increasing.
The data "means that the worst is yet to come and policymakers will be
very worried, particularly with consumption growth falling off a cliff,"
said Sue Trinh, head of Asia FX strategy at RBC Capital Markets in Hong
"So I expect further support measures including rate cuts will come in
coming weeks, although these data would indicate measures to date aren't
The Chinese yuan weakened 0.4 percent to 6.9063 per dollar in offshore
trade following the data.
"Although hopes of progress in U.S.-China talks and cheap valuations are
supporting the market for now, we have lots of potential pitfalls," said
Nobuhiko Kuramochi, chief strategist at Mizuho Securities.
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Men look at stock quotation boards outside a brokerage in Tokyo,
Japan, December 5, 2018. REUTERS/Issei Kato
"If U.S. shares fall below their triple bottoms hit recently, that
would be a very weak technical sign."
Overnight on Wall Street, the S&P 500 ticked down 0.02 percent 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 percent.
U.S. corporate earnings due next month could throw a spotlight on
the impact from the U.S. tariffs on imports from China, while there
is risk of a government shutdown and further political stalemate in
a divided U.S. congress, Kuramochi added.
In the currency market, the euro was down 0.7 percent after the weak
PMIs, last changing hands at $1.1293.[FRX/]
Sterling's rally fizzled as signs that the British parliament was
headed towards a deadlock over Brexit prompted traders to take
profits from its gains made after Prime Minister Theresa May had
survived a no-confidence vote.
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 pound fell 0.6 percent to $1.2615, on track to post its fifth
consecutive week of losses. It was down 0.9 percent so far this
The dollar stood at 113.48 yen, down 0.1 percent on the day but
above this week's low of 112.245 set on Monday.
Oil prices gave up some of their Thursday's gains following
inventory declines in the United States and expectations that the
global oil market could have a deficit sooner than they had
U.S. crude futures edged down 0.5 percent to $52.32 per barrel and
Brent crude slipped 0.6 percent to $61.09, after both gained more
than 2.5 percent 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.
(Reporting by Ritvik Carvalho; additional reporting by Hideyuki Sano
and Tomo Uetake in Tokyo; Editing by Hugh Lawson)
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