World Equity Markets Continue To Sink Amid Flood Of Bad News

Weaker and weaker
Wall Street traders (Photo: Reuters)

The latest data from around the world confirms a steadily weakening global economy battered by uncertainties, with world equity markets reeling from unrelenting volatility.

Machinery orders in Japan plummeted in January at the fastest pace in four months, helping push the Nikkei down more than 1 percent. A key index of consumer sentiment in Australia slipped in March. The United State saw monthly inflation rise in February albeit at the smallest gain since September 2016.

Taken together, this information unnerved investors and roiled markets. MSCI's Asia-Pacific equity index lost 0.3 percent.  MSCI's world index is off the 4 1/2-month highs it reached when the U.S. and China appeared close to a trade agreement last month. The index then malingered in March after two months of gains.

On the continent, German and French indices skidded by 0.2 percent. Wall Street is dreading a weaker open today as evidenced by weak futures.

Britain's political chaos stoked by the intractable Breexit conundrum is also depressing sentiment. A partisan House of Commons hasn't been able to agree on how to exit the European Union by a March 29 deadline.

On Tuesday, lawmakers defeated for the second time Prime Minister Theresa May's proposed Brexit agreement. Confoundingly, they are expected to reject leaving the EU without a deal, which they did today.

UBS analysts said even if lawmakers do reject no-deal Brexit, the eventual outcome remains unclear. It advised clients to "remain cautious, and avoid chasing short-term rallies in sterling or increasing exposure to UK equities."

"Markets are still hopeful for a U.S.-China trade deal," said Steve Barrow, G10 strategist at Standard Bank.

He said his concern is "this is not necessarily going to ride to the rescue of the weak economy ... That means riskier financial assets like equities are going to struggle from here"

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