On 17 April, 2015 – Global markets declined on global growth concerns

Virtually all indices retreated on the day and week on escalating worries about Greece and concerns about new trading regulations in China.
United States
Stocks moved sharply lower Friday adding to the modest losses posted in the previous session. With Friday’s selloff, shares were down for the week as well. The Dow Jones industrials dropped 1.5% (1.3% on the week), the S&P declined 1.1% (1.0%) and the Nasdaq lost 1.5% (1.3%). The weakness in US markets was partly attributed to a selloff in Chinese futures, which fell sharply amid concerns about new trading regulations. Chinese regulators expanded the supply of shares available for short sellers while clamping down on over the counter margin trading.
Traders shrugged off a report from the University of Michigan showing a bigger than expected improvement in US consumer sentiment. The preliminary April consumer sentiment reading was 95.9, up from the March final reading of 93.0. March overall consumer prices and core prices both edged up 0.2% on the month. On the year, core prices were up 1.8%.
Honeywell International declined after reporting disappointing first quarter results. Earnings per share beat estimates but revenue fell short. Advanced Micro Devices dropped after reporting a larger than expected loss American Express retreated after revenues missed estimates partly due to the soaring dollar.
Worrisome news out of China also weighed on investors. After markets closed Friday in Asia, Chinese financial regulators issued warnings about that country’s soaring stock market. Regulators said they will tighten rules on borrowing to buy stocks. They also plan to make it easier for investors to bet against the market there.
On Sunday, the People’s Bank of China cut its bank reserve requirement ratio (RRR) by 100 basis points to 18.5% on Sunday. The bank said that the new reserve requirement would take effect from Monday, April 20. The goal is to stimulate more lending into the nation’s slowing economy. The latest cut, the deepest single reduction since the depth of the global crisis in 2008, shows how the central bank is stepping up efforts to ward off a sharp slowdown in the economy. The PBoC previously lowered the RRR by 50 basis points on February 4 which was the first industrywide cut since May 2012. The Bank also cut interest rates twice since November 2014 in a bid to lower borrowing costs and spur demand.
Gold at the afternoon London fixing was down US$1.99 to US$1,203.35. Copper futures were down 0.1% to US$2.77. WTI spot crude was down 97 US cents to US$55.74. Dated Brent spot crude was down 53 US cents to US$63.45. The US dollar was up against the Canadian and Australian dollars. However, it declined against the euro, yen, pound and the Swiss franc. The Dollar Index was down 0.3%. The yield on US Treasury 30 year bond was down 5 basis points to 2.52% while the yield on the 10 year note slipped 2 basis points to 1.87%.
Europe
European markets ended the week solidly in negative territory. The selloff was sparked in part by changes made by Chinese regulators — they expanded the supply of shares available for short sellers while clamping down on margin trading. Concerns over the situation in Greece also weighed on investors. The FTSE lost 0.9% (down 1.3% on the week), the CAC was down 13.6% (down 1.8%) and the SMI retreated 1.6% (down 2.4%). The DAX dropped 2.6% and 5.5% on the week.
Jitters over the financial future of Greece roiled markets. Strategists said that a lack of progress in negotiations between Greece and its international creditors had substantially increased the risk of Greece defaulting on its debt and even exiting the euro. German Finance Minister Wolfgang Schaeuble refused further concessions to Greece and the International Monetary Fund ruled out giving the country any leeway on debt repayments of €1 billion due by early May. Meanwhile, Greek Prime Minister Alexis Tsipras reportedly said he was “firmly optimistic” that there will be an agreement with creditors by the end of April. As per the Eurogroup accord on February 20, Greece must reach an outline funding agreement with its lenders at the Eurogroup meeting on April 24.
Banks including Deutsche Bank, Commerzbank, Crédit Agricole, BNP Paribas and Société Générale retreated. Fresenius Medical Care and Fresenius were lower. Merck and Bayer finished lower. Accor advanced after reporting its first quarter sales rose. In London, mining stocks were under pressure. Anglo American, Antofagasta, BHP Billiton, Fresnillo and Glencore also declined. Nestlé, which reported quarterly sales, retreated in Zurich. Syngenta dropped after the chemicals firm issued first quarter sales figures, which reflected a currency impact.
In economic news, the March harmonized index of consumer prices slipped 0.1% on the year after a 0.3% decline in February. Swiss retail sales declined for a second straight month in February, marking its biggest annual decline on record. Retail sales dropped an adjusted 2.7% from following a 0.5% drop in January. UK unemployment rate fell to the lowest since 2008 and claimant count reached a 40-year low. The ILO jobless rate eased to 5.6% in three months to February while the claimant count unemployment rate slipped to 2.3%.
Asia Pacific
On Friday, markets here were mixed thanks to mixed economic reports and growing worries about Greece’s finances soured investor sentiment. While Japanese and Australian shares led the declines in the region, China’s stock market continued to rise on stimulus hopes. The Shanghai Composite was up 2.2% and 6.3% on the week. The Hang Seng eased 0.3% (up 1.4% on the week) as investors locked in profits after a recent rally triggered by inflows from mainland investors.
The Nikkei lost 1.2% on the day and 1.3% for the week as a stronger yen dampened investor sentiment and investors braced for the earnings season that will begin later this month. The yen advanced against the dollar as another round of discouraging US data and dovish comments from Federal Reserve officials pushed back expectations of an interest rate increase in the US.
The S&P/ASX lost 1.2% while the All Ordinaries slid 1.1% on the day. The indices were 1.5% and 1.4% lower respectively on the week. Miners were dragged down by lower iron ore prices. The big four banks also retreated. The Kospi added 0.2% and 2.7%. The Sensex was down 0.8% on the day and 2.7% for the week.
Global Stock Market Recap

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
Monday — Japan posts February tertiary index. Germany releases March producer price index.
Tuesday — the Reserve Bank of Australia publishes the minutes of its meeting held earlier this month. April ZEW survey for Germany will be released.
Wednesday — Japan reports March merchandise trade. Australia posts first quarter consumer price index. The Bank of England publishes the minutes from its monetary policy committee meeting held earlier this month. In the US, March existing home sales will be released.
Thursday — Flash PMIs will be released for China, Japan, the Eurozone, France, Germany and the US. The UK releases March retail sales. In the US, March new home sales and weekly jobless claims, money supply and Fed balance sheet will be released.
Friday — April Ifo survey for Germany will be released. US March durable goods orders are on tap.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday