Global shares, dollar slip as China inflation cools
World shares fell for a second day running and the dollar dropped to its lowest in almost a month on Wednesday following new signs of a slowdown in China’s economy.
Limp inflation figures from China, volatility in other major emerging markets and more falls in commodities dampened buying.
MSCI’s 45-country All World stock index .WORLD was down 0.4 percent at 400.24 points after a near 2 percent drop by Japan’s Nikkei had lead Asia lower and as the pan European FTSEurofirst 300 .FTEUS opened roughly 1 percent in the red. [.EU][.T]
The dollar .DXY fell to its lowest in almost a month against other main currencies on bets the uncertainty will prevent a rise in U.S. interest rates, oil slipped again while safe-haven gold XAU= notched a fourth day of gains. [/FRX][O/R][GOL/]
In Europe, eyes were on Portugal after talks to form a new government had broken down in Lisbon on Tuesday.
Caretaker prime minister Pedro Passos Coelho, whose center-right grouping won the Oct. 4 election but lost its parliamentary majority, failed to obtain backing from Socialist Party leader Antonio Costa.
Portugal’s bond yields rose, defying a broader debt market rally and though Lisbon stocks .PSI20 were up slightly on day they have shed over 5 percent so far this week and some bank stocks are down as much as 16 percent (BCP.LS).
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Brent oil LCOc1 retreated towards $49 a barrel as the International Energy Agency has indicated the oil glut will persist through next year. Industrial metals prices were all lower.
Fragile politics are adding to emerging market risks. Brazil’s real BRL= dropped about 2 percent overnight as President Dilma Rousseff accused her opponents of ‘deliberate coup-mongering’ as tensions rose over a federal audit of how deficit numbers were published.
The focus was still mostly on China though and what kind of reaction there will be from authorities there to clearly slowing growth. The country’s authorities are due to announce a new five-year economic plan later this month.
China’s consumer price index (CPI) rose 1.6 percent in September from a year earlier, the National Bureau of Statistics(NBS) said, falling short of expectations of 1.8 percent and down from August’s 2.0 percent.
Earlier in the day, the Monetary Authority of Singapore (MAS) had said that it will ease its monetary policy for the second time this year by slowing the pace of the Singapore dollar’s appreciation. The move was aimed at reviving an economy that narrowly avoided a recession in the third quarter.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS ended down 0.6 percent, while Japan’s Nikkei stock index .N225 slumped 1.9 percent.
Chinese shares were also lower, but only just. The blue-chip CSI300 index .CSI300 down 0.9 percent and the Shanghai Composite Index .SSEC losing 0.8 percent.
Australian shares also nudged lower, reflecting China’s importance as Australia’s main trading partner. It also came after Wall Street had dropped off a seven-week high SPX.
The U.S. central bank will hold just two more policy meetings in 2015, on Oct. 27-28 and Dec. 15-16, with expectations fading that the Fed will deliver a hike this year. [FED/DIARY]
The yield on benchmark 10-year Treasuries US10YT=RR slipped to 2.042 percent in early European trading while Wall Street futures were pointing to a steady restart. ESc1
The dollar index .DXY, which tracks the greenback against a basket of six peers, was down about 0.2 percent as the euro clawed itself back above $1.1411 EUR=.
Source: Reuters
