This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.theguardian.com/business/2014/oct/15/ebola-economic-concerns-european-us-stockmarkets

The article has changed 3 times. There is an RSS feed of changes available.

Version 0 Version 1
Ebola and economic concerns affect European and US stock markets Ebola and economic concerns affect European and US stockmarkets
(about 4 hours later)
Fears of a worldwide economic slowdown and anxiety about the spread of Ebola reverberated around stock markets yesterday, driving shares on both sides of the Atlantic sharply lower and pushing the price of oil to a four-year low. Fears of a worldwide economic slowdown and anxiety about the spread of Ebola reverberated around stock markets Wednesday, driving shares on both sides of the Atlantic sharply down and pushing the price of oil to a four-year low.
The FTSE 100 closed down 181 points or 2.8% at 6,211, knocking £46bn off the value of Britain’s top companies. This was its lowest level and biggest one-day fall since June last year. It was also close to the 10% decline from its recent peak on 4 September. The FTSE 100 closed down 181 points or 2.8% at 6,211, knocking £46bn off the value of Britain’s top companies. This was its lowest level and biggest one-day fall since June last year. It was also close to a 10% decline from its recent peak on 4 September.
In New York, the Dow Jones Industrial Average dropped sharply after European markets closed, slumping 420 points – 2.5% – and dipping below 16,000. Its recent high was 17,265 reached on 18 September – the day before the record breaking float of Alibaba, the vast Chinese internet business. The Vix volatility index, also known as the “fear index”, which is linked to the outlook for the US S&P 500 index, jumped by 22%, to its highest level for nearly three years. In New York the Dow Jones Industrial Average dropped sharply after European markets closed, slumping 420 points – 2.5% – and dipping below 16,000 before rebounding to 16,141. Its recent high was 17,265, reached on 18 September, the day before the record-breaking float of Alibaba, the vast Chinese internet business.
The Vix volatility index, also known as the “fear index”, which is linked to the outlook for the American S&P 500 index, jumped by 22% to 31.06, its highest level for nearly three years, before dropping back to 26.25, up 15% on the previous day.
In Europe the picture was the same. Germany’s Dax dropped 2.87% while France’s Cac was down 3.63%.In Europe the picture was the same. Germany’s Dax dropped 2.87% while France’s Cac was down 3.63%.
The catalyst for the renewed market turmoil was data indicating the US economy is being hit by a global fall in demand. US retail sales fell 0.3% in September, the first decline since January, and worse than the 0.1% decline expected, while producer prices fell by 0.1%, the first decline since August 2013. Meanwhile the Empire manufacturing report for New York slumped to 6.17 this month, from 20.5 in September. The catalyst for the renewed market turmoil was data indicating the US economy was being affected by a global fall in demand. US retail sales fell 0.3% in September, the first decline since January, and worse than the 0.1% decline expected, while producer prices fell by 0.1%, the first decline since August 2013.
The US updates followed weaker-than-expected inflation data from China, with the consumer prices index there hitting a near five-year low and prompting fears of a slowdown unless the central bank acts to revive the country’s slowing economy. Meanwhile, the Empire manufacturing report for New York slumped to 6.17 this month, from 20.5 in September.
As global slowdown fears mounted, oil hit a new four-year low, down 0.34% at $84.75 a barrel, with Opec unwilling to cut supplies even with demand faltering. The US updates followed weaker than expected inflation data from China, with the consumer prices index there hitting a near five-year low and prompting fears of a slowdown unless the central bank acted to revive the country’s slowing economy.
The stagnating eurozone economy has also been in the spotlight, particularly Germany, where the government this week cut its growth forecasts for the next two years after growing signs the country could slide into recession. As global slowdown fears grew, oil slumped to a new four-year low, down 0.34% at $84.75 a barrel, with Opec unwilling to cut supplies even with demand faltering.
The stagnating eurozone economy has also been in the spotlight, in particular Germany, where the government this week cut its growth forecasts for the next two years after growing signs that the country could slide into recession.
On Tuesday Greece seemed to be heading for a new political crisis and there were also concerns about the outcome of the European banking stress tests. The test results are due to be published at the end of the month.On Tuesday Greece seemed to be heading for a new political crisis and there were also concerns about the outcome of the European banking stress tests. The test results are due to be published at the end of the month.
Geopolitical tensions have also unsettled the markets, including the protests in Hong Kong, the continuing turmoil in the Middle East and the spread of Ebola, with another case being reported in Texas. Geopolitical tensions – including the protests in Hong Kong, the turmoil in the Middle East and the spread of Ebola, with another case reported in Texas – have also unsettled the markets.
In Greece the Athens market was down on fears of new political turmoil as the country struggles to put its economy back on track. A survey this week showed the Syriza party, which opposes the country’s bailout, had moved ahead of the government and prompted talk of a new election early next year. Greek 10-year bond yields soared by more than 80 basis points to 7.85%, their highest since February, threatening the country’s funding plans and its attempts to leave its bailout programme early. In Greece the Athens market was down on fears of new political turmoil as the country struggles to put its economy back on track. A survey this week showed the Syriza party, which opposes the country’s bailout, had moved ahead of the government and prompted talk of an election early next year.
The flood of cheap money supplied by central banks, notably the US Federal Reserve, which has been propping up the market for a number of years is beginning to be turned off. The Fed is due to end its monthly bond buying programme at the end of October. Greek 10-year bond yields soared by more than 80 basis points to 7.85%, their highest since February, threatening the country’s funding plans and its attempts to leave its bailout programme early.
Hopes that Mario Draghi, president of the European Central Bank, would implement a concerted bond buying programme to support the flagging eurozone economy are being dashed by opposition from Germany. The flood of cheap money supplied by central banks, notably the US Federal Reserve, which has been propping up the market for a number of years, is beginning to be turned off. The Fed is due to end its monthly bond buying programme at the end of October.
Hopes that Mario Draghi, president of the European Central Bank, would implement a concerted bond buying programme to support the flagging eurozone economy were being dashed by opposition from Germany.
On the currency markets the dollar lost ground as analysts said the poor US figures meant it was unlikely the Federal Reserve would raise interest rates in the immediate future.On the currency markets the dollar lost ground as analysts said the poor US figures meant it was unlikely the Federal Reserve would raise interest rates in the immediate future.
But as investors sought havens, gold rose $10 to $1243 an ounce, while UK bonds were also in demand. Ten-year gilt yields fell to 2.055%, the lowest since June 2013. But as investors sought havens, gold rose $10 to $1243 an ounce, while UK bonds were also in demand. Ten-year gilt yields fell to 2.055%, reaching their lowest level since June 2013.
A market analyst at IG, David Madden, said: “The spike in the Greek 10-year yield and the sudden collapse in the equity markets seems all too familiar, and it looks like we are entering another phase of the eurozone debt crisis.” David Madden, a market analyst at IG, said: “The spike in the Greek 10-year yield and the sudden collapse in the equity markets seems all too familiar, and it looks like we are entering another phase of the eurozone debt crisis.”
The director of global research at Barclays, Henk Potts, said: “The stock market is in fear mode at the moment on worries about global growth conditions and normalisation of US interest rates. But if the sell-off continues, it could prove to be a strong entry point into an asset class that we think will continue to outperform.” Henk Potts, director of global research at Barclays, said: “The stock market is in fear mode at the moment [over] worries about global growth conditions and normalisation of US interest rates. But if the sell-off continues it could prove to be a strong entry point into an asset class that we think will continue to outperform.”