TOKYO–Global stocks sagged Wednesday as pessimism about global growth spread following a decline on Wall Street overnight and a strengthening yen, which dampened prospects for export-oriented Japan.
Germany’s DAX edged down 0.4 percent to 9,049.38 in early trading, while France’s CAC 40 was little changed at 4,209.39. Britain’s FTSE 100 was down 0.3 percent at 6,477.61. U.S. shares were set to recoup some of the losses from the previous session, with Dow futures inching up 0.05 percent to 16,660.00. S&P 500 futures were up 0.1 percent at 1,930.30.
Market players were turning less upbeat about the future of global economies after the International Monetary Fund (IMF) trimmed its outlook for this year and next, mostly because of weaker expansions in Japan, Latin America and Europe. The IMF expects the global economy will grow 3.3 percent this year, slightly below what it forecast in July.
The U.S. Federal Reserve is due to release notes on its latest meeting on Wednesday. Investors will be looking for signs of when the Fed might raise interest rates. The first rate increase is not expected until mid-2015.
Takuya Takahashi, strategist at Daiwa Securities Co. in Tokyo, said a number of factors were at work, including the decline on the U.S. market and signs of the German economy slowing down. “Concerns about the world economy are working to push stock prices down,” he said. “I was expecting them to go down even further.” But he said players were taking a wait-and-see attitude ahead of comments from the Fed and earnings from U.D. companies.
On Tuesday, concerns about global growth sent U.S. share prices lower. The Standard & Poor’s 500 index fell 1.5 percent, the Dow Jones industrial average dropped 1.6 percent and the Nasdaq composite fell 1.6 percent.
German industrial output fell 4 percent in August, far more than expected. The slump follows other disappointing economic reports and suggests Europe’s economy will not recover as strongly as hoped in the third quarter, keeping a lid on the 18-country eurozone.
Asian markets mostly slipped Wednesday. Tokyo fell 1.19 percent, or 187.85 points, to finish at 15,595.98, while Seoul lost 0.39 percent, or 7.66 points, to 1,965.25 and Sydney eased 0.81 percent, or 42.9 points, to 5,241.3. Hong Kong shares slipped 0.68 percent Wednesday, ending a three-day winning streak, as traders followed a sell-off in Europe and the United States after the IMF downgraded its global economic growth forecasts. The Hang Seng Index shed 159.19 points to 23,263.33 on turnover of HK$65.11 billion (US$8.40 billion). However, Chinese stocks ended higher as dealers returned from a week-long holiday, with the Shanghai index hitting a new 19-month high. The benchmark Shanghai Composite Index rose 0.80 percent, or 18.92 points, to 2,382.79 on turnover of 180.3 billion yuan (US$29.4 billion). It was the highest close since February 20, 2013, when the index ended at 2,397.18 points. The Shenzhen Composite Index, which tracks stocks on China’s second exchange, jumped 1.37 percent, or 18.32 points, to 1,351.82 on turnover of 207.1 billion yuan.
The Fund slashed its outlook for Japan this year from 1.6 percent growth to 0.9 percent, underscoring the damage of April’s sales tax hike, while it left its forecast for China unchanged but warned of “near-term growth risks”, especially in the real estate sector. Gold was at US$1,217.32 an ounce against US$1,206.14 late Tuesday. In other markets: — Wellington rose 0.19 percent, or 10.19 points, to 5,245.90. Warehouse Group added 0.98 percent at NZ$3.10 and Fletcher Building was steady on NZ$8.61. — Manila slipped 0.74 percent, or 53.70 points, to 7,185.68.