Traders work at their desks in front of the German share price
index, DAX board, at the stock exchange in Frankfurt, Germany,
October 12, 2016.
World stocks stumbled to their lowest level in a month on
Thursday and the dollar and benchmark bond yields slipped, after
a sharp decline in Chinese exports revived concerns about the
health of the world's second-biggest economy.
Riskier assets have had a difficult few weeks,
undermined by concerns about a potential rise in U.S. interest
rates, the outcome of U.S. elections, Britain's departure from
the EU and the health of German and Italian banks.
Asia's markets suffered falls overnight after data
showed Chinese imports in dollar terms were back in
contractionary territory, while exports dropped by a
sharper-than-expected 10 percent.
Europe took a thumping too, with falls of 0.7-1.3
percent for Britain's FTSE, Germany's DAX and France's CAC
pulling the region down for the sixth day in the last seven
ahead of what was expected to be a 0.5 percent fall on Wall
Street. [.N]
"We have got a stronger dollar and that is the
market now pricing in the likelihood of a December U.S Fed rate
hike," said Rabobank currency strategist Jane Foley.
"The other theme is the weakness of Chinese exports.
That does help turn the spotlight on the recent weakness of the
yuan. Then of course there is sterling."
Bets on a Federal Reserve move remained broadly
unchanged after minutes on Wednesday from the U.S. central
bank's last meeting had shown policymakers still grappling over
timing, but on balance inching closer to a hike.
The minutes said "it was noted that a reasonable
argument could be made either for an increase at this meeting or
for waiting for some additional information on the labor market
and inflation."
That was just enough uncertainty to pull the dollar
off a 2-1/2-month high versus the yen and push ten-year yields
on U.S. government debt down 5 basis points to 1.74 percent, a
relatively large move out of U.S. hours.
There was no reprieve for Britain's pound though as
it fell to $1.2150 and to 90.5 pence per euro, extending a slump
of 15 percent or more since the UK's June vote to leave the EU.
[FRX/] (for graphic click
tmsnrt.rs/2egbfVh)
The impact of the plunge was starting to show beyond
the market too, as the UK's largest supermarket Tesco started
taking some of the products from one of its biggest suppliers,
Unilever, off its shelves after refusing to accept a 10 percent
price hike.
The spat sent both firms' shares down over 2 percent
and Unilever's close to 3. [.EU] "Clearly Unilever won't be the
only company wanting to pass on a 10 percent or similar price
increase due to the fall in the pound," Rabobank's Foley added.
THE ANTI-TAPER
With U.S. earnings season kicking off, Wynn Resorts
and Delta Airlines are scheduled to report later ahead of a host
of big name banks on Friday. [.N]
Germany's Deutsche Bank < DBKGn.DE> saw its battered
shares drop 2 percent in Europe after it was hit with its latest
fine and sources said it was implementing a hiring freeze.
The euro was choppy too, dropping under $1.10 for
the first time in almost three months at one point after Reuters
reported the ECB was considering a number of changes to its 1.5
trillion euro stimulus programme.
Sources at the central bank told Reuters the options
included occasionally buying bonds with yields lower than its
-0.4 deposit rate as well as being a bit more flexible on how
much of each countries' bonds it buys.
Back in China, the poor batch of trade numbers saw
the offshore version of the yuan fall to lows last reached in a
dramatic sell-off in January and the tightly controlled
'onshore' one hit a six-year low.
MSCI's broadest index of Asia-Pacific shares outside
Japan touched its lowest since Sept. 19 too as Hong Kong stocks
fell 1.2 percent and Japanese shares dropped 0.4 percent thanks
to a stronger yen.
"The China data has exacerbated the broad cautious
mood and we should see more gains for the yen and other
safe-haven assets," said a currency trader at an Asian bank in
Hong Kong.
The Thai baht held close to an eight-month low as
Bangkok announced the death of 88-year-old King Bhumibol
Adulyadej, the world's longest reigning monarch.
Turkey's lira hit a record low after the government
signalled it was reviving plans for an executive presidency for
Tayyip Erdogan.
Oil prices steadied following a 1 percent drop
overnight after the Organization of Petroleum Exporting
Countries reported its output hit an eight-year high in
September, offsetting optimism over a pledge to restrict output.
[O/R]
Copper and other industrial metals were flushed
lower however by the China jitters [MET/L], while safe-haven
gold edged up to $1,257 an ounce following a 6 percent slump
over the last three weeks.
For Reuters new Live Markets blog on European and UK
stock markets see
reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
($1 = 0.8928 euros)
(Reporting by Marc Jones; editing by John
Stonestreet)
© Thomson Reuters 2016 All rights reserved
http://www.reuters.com/article/us-global-markets-idUSKCN12D02K