LONDON (Reuters) – Global stocks slid lower on Friday, hitting the worst week in more than five years as fears over corporate profits led to fears over global trade and economic growth.
The German Stock Index DAX Grafik is listed on the Frankfurt Stock Exchange, 24 October 2018. REUTERS / Personal / File Photo
European equities saw a decline in US stock futures as Alphabet and Amazon profits failed to meet expectations, adding to risk appetite as the European result also disappointed.
The leading index of Eurozone shares fell 1.5 percent. The German DAX lost 1.7 percent and the French CAC 40 1.8 percent. [.EU]
The MSCI All-Country World Index, which tracks equities in 47 countries, lost 0.3% after its inception in Europe. It was scheduled for the fifth consecutive week of losses, the largest losing series since May 2013.
"The expectations for US corporate earnings are quite high, and if they are not met, the reactions are pretty strict," said Miraji Othman, credit strategist BayernLB.
"We've gotten used to solid numbers, 18 percent revenue growth, 25 percent revenue growth, etc. The ratings have become very ambitious."
S & P E-Mini futures slumped 0.84 percent, potentially opening a tough session for US markets.
MSCI's broadest index of Asia-Pacific equities outside Japan fell 0.9 percent. As a result, profits fell in the first hour, reaching their lowest level since February 2017. The Chinese yuan slid above a key level, returning to focus on the slowdown in the world's second-largest economy.
The MSCI Asia Index has been hit by a sell-off over the past few days and is on its fifth weekly loss – the longest losing streak since 2015. It has fallen more than 4 percent this week.
Chinese stocks tumbled and the yuan fell $ 6.96 to the US dollar, its lowest level against the dollar since December 2016.
The blue chip index fell by 0.6 percent and the Shanghai Composite by 0.2 percent. In Hong Kong, the Hang Seng index was down 1.1 percent, while tech stocks lost 3.13 percent.
Tech companies also fell in South Korea, where the broader market lost 1.75 percent. The Kospi had previously reached its lowest level since December 2016.
Australian stocks ended smoothly. The Japanese Nikkei stock index closed 0.4 percent, ending the week down 5.98 percent.
Financial markets have been unsettled in recent sessions amid fears of global growth from Sino-US friction, a mix of US corporate earnings, Federal Reserve rate hikes, and an Italian budget dispute.
Bear markets – a drop in prices of 20 percent or more of the recent highs – have risen above indices and individual stocks since the beginning of the year.
"The first and most important (concern) is that the Fed's tightening and slowing fiscal stimulus will turn the US economy bad, and second, the Chinese economy will continue to struggle," Capital Economics analysts said in a note to customers.
"As we've been arguing for some time, those worries are likely to get worse over the next twelve months."
MAKE THE GAP
In the currency markets, the euro fell after Mario Draghi, president of the European Central Bank, said that the Bank's € 2.6 trillion purchase program would end this year, and interest rates would rise in the face of fears of economic and monetary union Future summer could rise.
The single currency was 0.1 percent lower at $ 1.1365.
The dollar fell 0.3 percent against the yen at 112.04. The dollar index, which tracks the US currency against a basket of six major competitors, was down 0.05 percent at 96,629.
Traders expect a strong assessment of US gross domestic product data on Friday, which could strengthen the dollar.
"Today's robust US GDP will show the market the deep separation between the US and the Eurozone in terms of growth performance," said Than Lan Nguyen, Commerzbank analyst.
The British pound was close to seven weeks against the dollar and three weeks low against the euro as there were doubts as to whether Britain and the European Union could reach a Brexit deal. [GBP/]
Bloomberg, citing people familiar with the affair, said on Friday that the Brexit talks were put on hold because Prime Minister Theresa May's cabinet was not close enough to decide what to do next.
US Treasury yields fell as equity markets plummeted. The ten-year yield fell to 3.0920 percent, compared to the closing price of 3.136 percent on Thursday in the US.
The oil price faced a third weekly loss after Saudi Arabia warned of oversupply and the collapse of stock markets and trade concerns had dampened the outlook for demand for fuel. [O/R]
US crude fell 1 percent to $ 66.68 a barrel. Brent crude fell 0.73 percent to $ 76.33 a barrel.
Spot gold rose 0.4 percent to $ 1,236.17 per ounce. [GOL/]
Reporting by Ritvik Carvalho; additional coverage by Abhinav Ramnarayan and Tom Finn in London; Editing by Larry King