Global stocks tumble on weak eurozone outlook, US-China trade angst

Traders work on the floor of the New York Stock Exchange February 7, 2019. — Reuters pic
Traders work on the floor of the New York Stock Exchange February 7, 2019. — Reuters pic

NEW YORK, Feb 8 — Global stocks tumbled yesterday on a downgrade to Europe’s economic growth outlook and revived doubts on the US-China trade dispute.

“Yet more bad news reinforces the impression that the eurozone is headed steadily into recession territory,” noted IG analyst Chris Beauchamp.

The EU Commission, the bloc’s executive arm, said it now expects growth of 1.3 per cent in the eurozone this year, a significant cut from the 1.9 per cent it predicted only last November.

It said Europe is facing international headwinds — including Brexit fears, Italian economic woes and the global trade war — which have now taken the steam out of a post-crisis recovery in the eurozone.

Frankfurt’s DAX 30 index lost 2.7 per cent following the announcement, while the Paris CAC 40 index fell 1.8 per cent.

London stocks, although also lower, outperformed their peers after the Bank of England left interest rates unchanged.

The Bank of England slashed its forecast for UK growth this year to 1.2 per cent from 1.7 per cent, blaming the downgrade on a global economic slowdown and “the fog of Brexit”.

Wall Street stocks, meanwhile, suffered their biggest losses in more than two weeks after a top White House economist Larry Kudlow said in a broadcast interview that there was still a “sizeable distance” between Washington and Beijing in high-stakes trade talks.

President Donald Trump last week said he expected to meet with China’s President Xi Jinping in person “in the near future” to seal a final trade deal, but yesterday, said the meeting would not take place before March 1 when tariffs were due to rise.

Trump’s remarks added “fuel to the fire,” William Lynch of Hinsdale Associates told AFP, noting that corporate profits were not helping matters.

“We still have earnings season and some of the reports I saw earlier today were not all that good, for the most part they missed earnings estimates,” he said.

Twitter plunged 9.8 per cent after quarterly results showed a shrinking global user base.

But SunTrust soared 10 per cent and BB&T rose 3.9 per cent after the midsized banks announced plans for a US$66 billion (RM268.7 billion) merger, creating the sixth-largest US bank. — AFP