Global stocks sink after Wall Street plunge, enthusiasm for Fed stance fades

BANGKOK – Global stocks sank Friday after Wall Street suffered its worst day of the year and weak German trade data fueled worry Europe is sliding into recession.

KEEPING SCORE: Germany’s DAX fell 1 per cent to 8,921.50. Britain’s FTSE-100 lost 0.8 per cent to 6,431.85 and France’s CAC-40 declined 0.7 per cent to 4,111.50. Wall Street looked set for more declines, with the future for the Dow Jones industrial average down 0.1 per cent in pre-market electronic trading and the Standard & Poor’s 500 flat. On Thursday, the DJ lost 2 per cent and the S&P fell 2.1 per cent.

ASIA’S DAY: Tokyo’s Nikkei 225 index plunged 1.3 per cent to 15,286.25 points and Hong Kong’s Hang Seng lost 1.6 per cent to 23,144.81. China’s Shanghai Composite Index shed 0.6 per cent to 2,375.28. Seoul fell 1.3 per cent and Sydney and Singapore also declined.

WALL STREET: Volatility returned to U.S. markets as stocks had their worst day of the year just 24 hours after recording their best. Prices fell after members of the Federal Reserve board expressed concern about inflation, tempering suggestions in minutes of a recent Fed meeting released Wednesday that suggested interest rates would not be raised for now. All 30 stocks in the DJ declined.

EUROPE: Concerns Europe is headed for recession rose after Germany, the continent’s biggest economy, reported its weakest year-on-year export growth in five years. The president of the European Central Bank, Mario Draghi, gave no indication of any further monetary stimulus, suggesting in a speech in Washington that governments need to do more on the fiscal side.

ANALYST’S TAKE: “Markets are markets are rather unimpressed with the state of global growth (EZ in the most unflattering state) and equally unimpressed with potential policy response,” said Mizuho Bank in a report.

HONG KONG: The government called off talks with pro-democracy protesters, possibly extending demonstrations that have blocked streets for almost two weeks. The protesters want a bigger public voice in the selection of the territory’s next leader in 2017. The impact on this Asian financial centre’s economy has been limited but analysts warn it could rise if protests erode its appeal to foreign companies and investors.

ENERGY: Benchmark U.S. crude plunged $1.34 to $84.43 per barrel on concerns slowing global economic growth will reduce demand while production stays high. The contract lost $1.56 on Thursday to $85.77. Brent crude, used to price international oils, lost $1.17 to $89.19.

CURRENCY: The dollar rose to 107.95 yen from Thursday’s 107.87 yen. The euro fell 1 U.S. cent to $1.26.