Asia
After a lower close on Wall Street, Japan’s Topix index slumped nearly 2% on the day to record its fifth straight day of losses. The share price-weighted Nikkei fell a similar amount to close just above 22,000 points, meaning that the index has lost around 1,000 points in a week. With the yen strengthening and the dollar faltering, the investment case for Japanese equities also weakened in the short-term.
Despite the Japanese stock market’s recent strong run, latest growth figures show that the domestic economy is still lacking momentum. Japan’s GDP grew 0.3% in the third quarter, lower than forecasts, and half the level seen in the second quarter. Nevertheless, this was the seventh consecutive quarter of growth, the longest since 2001, a further signal to international investors to keep faith with Abenomics, the programme of expansion associated with prime minister Shinzo Abe.
China’s equity markets were not immune to the weaker trend in global equities. Investors were preoccupied with falls in commodity prices, with iron ore and coking coal prices falling sharply amid fears of slowing industrial demand in the country.
Europe
With commodity prices sliding, London’s listed miners headed lower on Wednesday, dragging down the index: Glencore (GLEN), Anglo American (AAL), Rio Tinto (RIO) and BHP Billiton (BLT) were among the biggest fallers on the FTSE 100.
Employment and wage figures released today revealed the continuing gap between inflation, confirmed yesterday at 3%, and wages, which are rising 2.2%, according to the Office for National Statistics.
In Europe, one bright spot for European manufacturers came with the news that Airbus (AIR) had sealed a deal to sell 430 jets for just shy of $50 billion – one of the biggest deals by volume the industry has ever seen. The plane maker’s shares jumped in Wednesday morning trading in Paris.
Nevertheless, European indices caught the global mood, and Germany’s Dax was more than 1% lower approaching midday.
North America
This week’s economics highlight in the US is the inflation number for October, which is expected to show a 2% rise in the cost of living as measured by the Consumer Price Index. This would be a fall from September’s 2.2%. The lack of inflationary pressure in the US economy is one of the puzzles being analysed by the Federal Reserve as it charts the course of interest rates for the coming year. Interest rates are still expected to rise in December.
With markets falling on Tuesday, futures contracts are also forecasting further weakness at the open on Wednesday – the Dow Jones is expected to fall 100 points initially.
Retailer Target (TGT) before the market opens on Wednesday, while Nasdaq-listed networking firm Cisco Systems (CSCO) reports after the market closes.
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