London: World stock markets slid Monday on economic worries over China and Italy, allied to the prospect of rising US interest rates, dealers said.
Wall Street dipped at the opening bell, with strong jobs data fanning expectations the Federal Reserve will hike rates at a quicker pace than previously thought.
In Europe, Milan stocks tumbled 2.5 percent on concern that Italy could face a sovereign debt crisis, after its populist government passed a purse-busting budget last week to the chagrin of the EU.
London stocks lost 0.6 percent with Royal Mail notably plummeting eight percent on a Monday profit warning, while both Frankfurt and Paris each gave up 0.9 percent.
The Tokyo market was shut for a holiday.
– ‘All-round sell-off’ –
“It’s an all-round sell-off: the prospect of high-interest rates from the Fed could not come at a worse time, given the slowdown in the Chinese economy and other emerging economies as well as the Italian debt and fiscal crisis,” CMC Markets analyst David Madden told AFP as Shanghai skidded to close 3.7 percent down.
The People’s Bank of China had lowered the required reserve ratio (RRR) as it looks to shore up the economy after a series of weak data, amid Beijing’s trade war with Washington.
“The fact the authorities are cutting the amount of capital banks need to hold in relation to their loan book suggests they are worried about the economy,” noted Madden.
“It gives off the impression the country is gearing up for a protracted trade spat.”
European investors are meanwhile concerned about Italy, which sparked disquiet last week by unveiling a budget that set the public deficit at around 2.4 percent of gross domestic product (GDP) for the next three years, earning a rebuke from Brussels and forcing it to row back slightly.
– ‘Bunker of Brussels’ –
The European Commission wrote last week to Italian economy minister Giovanni Tria outlining ‘serious’ concerns about the budget, but Deputy Prime Minister Luigi Di Maio responded the government will ‘not retreat’ on spending plans.
Fellow Deputy Prime Minister Matteo Salvini ramped up the war of words, attacking EU Commission head Jean-Claude Juncker and EU Economics Commissioner Pierre Moscovici directly.
“Europe’s enemies are those cut-off in the bunker of Brussels,” said Salvini, blasting “the Junckers, the Moscovicis, who brought insecurity and fear to Europe and refuse to leave their armchairs.”
Fawad Razaqzada of FOREX.com found that “risk appetite remained largely non-existent at the start of the new week” after “a series of events lately including trade disputes, emerging market currency crises and concerns over interest rate hikes in the US as well as tightening of monetary conditions elsewhere.”
– Brazil’s Bolsonaro bounce –
Wall Street marked Colombus Day by retreating as the Dow Jones opened shedding 0.25 percent while the Nasdaq sank 0.53 percent despite news of unemployment at a 49-year low and of rising wages.
Bucking the sagging trend was Brazil, where the Ibovespa index rose six percent on the Sao Paulo exchange after far-right candidate Jair Bolsonaro topped first-round voting in Sunday’s presidential election.
Oil prices meanwhile fell back after the crown prince of major producer Saudi Arabia said it could access spare capacity to fill in for any shortages from Iran when US sanctions are imposed on the country next month.
– Key figures around 1345 GMT –
MILAN – FTSE MIB: DOWN 2.5 percent at 19,840.50 points
New York – Dow Jones: DOWN 0.25 percent at 26,381.31
London – FTSE 100: DOWN 0.8 percent at 7,258.47
Paris – CAC 40: DOWN 1.1 percent at 5,298.56
Frankfurt – DAX 30: DOWN 0.9 percent at 12,004.25
EURO STOXX 50: DOWN 0.9 percent at 3,315.64
Hong Kong – Hang Seng: DOWN 1.4 percent at 26,202.57 (close)
Shanghai – Composite: DOWN 3.7 percent at 2,716.51 (close)
Tokyo – Nikkei 225: Closed for a holiday
Euro/dollar: DOWN at $1.1471 from $1.1524 at 2100 GMT
Pound/dollar: DOWN at $1.3053 from $1.3120
Dollar/yen: DOWN at 113.16 from 113.72 yen
Oil – Brent Crude: DOWN $0.28 at $83.88 per barrel
Oil – West Texas Intermediate: DOWN 55 cents at $73.79
[source_without_link]AFP[/source_without_link]