Markets tumbled on Tuesday as concerns spread to the Chinese and US economies. From Bloomberg:
Stocks sank from Shanghai to New York, with the MSCI World Index losing the most in 14 months, and two-year Treasury yields slid to a record low on concern over weakening growth in China and a slump in U.S. consumer confidence. The euro fell to an eight-year low versus the yen.
The MSCI World Index of 24 developed nations lost 3.2 percent, its biggest retreat since April 2009, as of 4 p.m. in New York. The Standard & Poor’s 500 Index slid 3.1 percent to 1,041.24, its lowest close since October, as 499 of its stocks declined. The Shanghai Composite Index tumbled 4.3 percent. The benchmark 2012 Treasury note yield slid as low as 0.5857 percent and the 10-year yield sank below 3 percent for the first time in 14 months. Oil and copper slumped at least 3 percent...
The tumble in global stocks began after the Conference Board said its leading economic index for China rose 0.3 percent in April, less than the 1.7 percent reported June 15. Losses accelerated after the same research group’s gauge of U.S. consumer confidence slumped to 52.9 in June, below all 71 projections in a Bloomberg News survey of economists. The S&P 500 has tumbled 11 percent since the end of March, headed for its first quarterly loss in a year.
Meanwhile, Europe also continues to be a source of stress for markets.
Today’s data damaged investor confidence amid concern a Labor Department report July 2 will show the U.S. lost jobs for the first time this year, while European bank balance sheets come under heightened scrutiny as a lending facility from the region’s central bank expires.
The rate banks say they charge each other for three-month loans in euros rose to 0.688 percent in London, the highest in eight months, as institutions hoarded cash before the 12-month European Central Bank lending facility expires later this week.
Japanese economic data on Tuesday added to the pessimism. From AFP/CNA:
The unemployment rate edged higher in May to 5.2 percent, rising by 0.1 percentage points from the previous month, government data showed Tuesday...
Average household consumption also fell unexpectedly in May by 0.7 percent on-year, the government said, defying expectations of a 0.5 percent rise as weak domestic demand continues to burden the Japanese economy...
Factory output was down 0.1 percent on month in May, the first drop in three months following a 1.3 percent gain in April.
Further evidence of slower economic growth in Japan came today with the Nomura/JMMA Japan manufacturing PMI falling to 53.9 in June from 54.7 the previous month.
Europe, though, provided better economic data on Tuesday. From Bloomberg:
European confidence in the economic outlook unexpectedly improved in June after reviving global growth and a drop in the euro bolstered the region’s recovery.
An index of executive and consumer sentiment in the 16 euro nations rose to 98.7 from 98.4 in May, the European Commission in Brussels said today. Economists had projected a drop to 98.1, according to the median of 25 estimates in a Bloomberg News survey. The commission’s index is based on a survey of 130,000 managers and 40,000 consumers conducted in the first two weeks of the month.