Warning over 'gathering storm' weighs on global markets
by Associated Press
LONDONMar 08, 2016 - 12:00 am GMT+3
by Associated Press
Mar 08, 2016 12:00 am
European stock markets are posting sizeable falls Monday with investors seemingly anxious over what further stimulus the European Central Bank will provide at its policy meeting later this week. A warning from the Bank for ınternational Settlements over a "gathering storm" in the global economy further weighed on sentiment.
In Europe, Germany's DAX fell 1 percent to 9,731 while France's CAC-40 lost 0.8 percent to 4,419. Britain's FTSE 100 lost 1 percent to 6,141. Wall Street was headed for losses at the open too, with Dow futures and the broader S&P 500 futures 0.3 percent lower.
The big event this week will likely be the latest policy meeting of the ECB. Following a series of hints from ECB President Mario Draghi and confirmation that inflation across the 19-country eurozone has fallen back below zero, investors expect a further stimulus from the central bank. That could include a further cut into negative of the deposit rate, from minus 0.3 percent, and an expansion of the monthly bond-buying program from the central bank. Most interest is on the expected deposit rate cut, which essentially penalizes banks from keeping balance at the ECB in the hope that they lend to the wider economy.
China has been one of the main concerns in markets this year as investors have fretted over the scale of the slowdown in the world's number 2 economy. Over the weekend, Premier Li Keqiang lowered Beijing's official growth target to 6.5-7 percent from last year's "about 7 percent" and promised more market-opening reforms. The ruling Communist Party is striving for more self-sustaining growth based on domestic consumption to reduce reliance on trade and investment. But the slowdown is rattling markets and unnerving China's trading partners as it dampens demand for industrial components and raw materials.
The Shanghai Composite ındex rose 0.8 percent to 2,697.34 and Sydney's S&P ASX 200 gained 1 percent to 5,142.80. Seoul's Kospi advanced 0.1 percent and Bangkok and Taiwan also rose. Tokyo's Nikkei retreated 0.6 percent to 6,911.32 and Hong Kong's Hang Seng shed 0.1 percent to 20,159.72.
Benchmark U.S. crude gained 45 cents to $36.37 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, added 46 cents to $39.18 per barrel.