Wednesday 21 February 2018

Stock markets fall as eurozone slips further into recession

France's Prime Minister Jean-Marc Ayrault
France's Prime Minister Jean-Marc Ayrault

GLOBAL equity markets fell on Thursday on news the eurozone slipped deeper into recession than expected in late 2012, while the dollar extended gains against the euro after data showed U.S. jobless claims fell more than expected last week.

he euro zone's 17-country economy shrank 0.6pc, with Germany contracting 0.6pc on the quarter, official data for gross domestic product showed, marking its worst performance since the global financial crisis was raging in 2009.

The French economy also contracted.

 Germany is expected to rebound but the figures suggest the bloc as a whole could remain in recession in the first quarter of this year, despite a recent jump in market sentiment as fears that the currency bloc could fall apart faded.

    Stocks on Wall Street followed European equity markets lower, with news that that Warren Buffett's Berkshire Hathaway and 3G Capital will pay $23bn in cash to buy food maker H.J. Heinz unable to turn investor sentiment.

    Berkshire and the private equity firm will pay $72.50 per share, a 19pc premium to the stock's all-time high.

    "The market has weakened because of the GDP numbers," said Barclays commodities analyst Miswin Mahesh. "It's been a macro sell-off this morning with the GDP numbers coming out rather than any fundamental move in itself. Most asset classes have sold."

    MSCI's all-country world equity index fell 0.26pc to 355.83, and the FTSEurofirst 300 index of top European companies slipped 0.24pc lower to 1162.84.

    The Dow Jones industrial average was down 15.75 points, or 0.11pc, at 13,967.16. The Standard & Poor's 500

Index was down 2.12 points, or 0.14 percent, at 1,518.21.

The Nasdaq Composite Index was down 7.59 points, or 0.24pc, at 3,189.28.

    The euro fell 0.8 percent to 1.3344 against the dollar.

Against the yen, the dollar was down 0.2pc at 93.18.

    Oil prices initially fell after euro zone figures curbed expectations of accelerating global growth and higher energy demand.

The stronger-than-expected drop in U.S. jobless claims last week helped buoy U.S. crude markets, and Brent rebounded to trade at break-even.

    Brent crude oil fell 4 cents to $117.84 a barrel.

April Brent futures became the front-month contract on Thursday. U.S. crude rose 63 cents to $97.64.

    U.S. Treasuries yields edged back from 10-month highs on the euro zone data, helping boost demand for safe-haven debt.


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