Saturday, 14 April 2012

China slows, markets slump

China has reported that its economy grew 8.1 percent in the first quarter from the previous year, slower than the 8.9 percent increase in the previous quarter and, indeed, the slowest growth rate in nearly three years.

The US economy may also lose some momentum after the Thomson Reuters/University of Michigan’s preliminary index of consumer sentiment fell to 75.7 in April from 76.2 in March. The weaker consumer sentiment came despite the 12-month inflation rate falling to 2.7 percent in March, the lowest in a year.

The prospect of weaker economic growth in the two most important global growth engines, as well as continuing concerns over Spain, appear to have spooked investors on Friday. From Bloomberg.

Stocks fell, giving U.S. equities the longest slump since November and driving Spanish shares to the lowest level since 2009, after China posted slower-than-forecast economic growth and American consumer confidence weakened. Commodities slid and Treasuries rose.

The Standard & Poor’s 500 Index lost 1.3 percent to 1,370.26 at 4 p.m. New York time, declining a second straight week. The Stoxx Europe 600 Index fell 1.5 percent, completing a four-week slump, as Spain’s IBEX 35 sank 3.6 percent to a three- year low. The cost of insuring against a Spanish default rose to a record. The S&P GSCI Index of 24 raw materials slid 0.7 percent as copper fell 2.5 percent. Yields on 10-year Treasuries decreased six basis points to 1.99 percent.

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