There "seems to be a lot of fear in the market, a lot of panic," said Jackson Wong, VP of Tanrich Securities in Hong Kong, citing worries that the terms of a deal signed by President Obama on Tuesday to avoid a U.S. default may worsen an already slowing economy.
World Stocks Fall Amid Dim U.S. Prospects
SEOUL, South Korea (AP) — World stocks fell Wednesday as relief the U.S. averted a debt default gave way to increasing pessimism over prospects for the world’s biggest economy.
Oil extended losses, trading near $93 a barrel amid expectations slower U.S. economic growth will crimp demand for crude.
In Europe, London’s FTSE fell 0.9 percent to 5,664.98 in early trading. France’s CAC-40 declined 0.4 percent to 3,507.55, while Germany’s DAX advanced fell 0.5 percent to 6,763.54.
U.S. stocks were set for a higher opening after Tuesday’s sharp decline with Dow futures trading 0.6 percent higher at 11,871. Broader S&P 500 futures were up 0.7 percent to 1,256.
Sentiment was glum in Asia, where markets dropped after weak economic reports and poor earnings from several big companies, including high-end retailer Coach Inc., sent Wall Street sharply lower Tuesday.
U.S. consumers cut spending in June for the first time in nearly two years, while incomes rose by the smallest amount since September. That news followed a weak manufacturing survey the day before.
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Japan’s Nikkei 225 slid 2.1 percent to 9,637.14, its lowest close in five weeks, and Hong Kong’s Hang Seng shed 1.9 percent to 21,002.72. South Korea’s Kospi tumbled 2.6 percent to 2,066.26.
China’s Shanghai Composite Index fared somewhat better, falling less than 0.1 percent to 2,678.49. Stock markets in Australia, Taiwan, India, Singapore, the Philippines and Indonesia also dropped.
There “seems to be a lot of fear in the market, a lot of panic,” said Jackson Wong, vice president at Tanrich Securities in Hong Kong, citing worries that the terms of a deal signed by President Barack Obama on Tuesday to avoid a U.S. default may worsen an already slowing economy.
The Dow Jones industrial average fell 265.87 points, or 2.2 percent, to 11,866.62 on Tuesday for its eight straight decline. That’s the longest streak since October 2008.
The Standard & Poor’s 500 index, meanwhile, lost 32.89 points, or 2.6 percent, to 1,254.05. That was its seventh consecutive drop and the longest since the height of the financial crisis in October 2008.
Pessimism about the economy outweighed relief that the U.S. averted a potentially debilitating debt default after Obama signed a compromise bill Tuesday to raise the country’s $14.3 trillion borrowing limit.
The signing, which was the culmination of weeks of often acrimonious debate and political brinkmanship between Democrats and Republicans, came just hours ahead of a midnight deadline to raise the debt ceiling.
In currencies, the dollar rose to 77.30 yen from 77.22 yen late Tuesday in New York amid caution over potential moves by Japanese authorities to purchase the greenback to weaken their currency and support exporters. The euro, meanwhile, rose to $1.4268 from $1.4201.
Benchmark oil for September delivery was down 40 cents to $93.39 a barrel in electronic trading Wednesday on the New York Mercantile Exchange. Crude lost $1.10 to settle at $93.79 on Tuesday
Associated Press writer Alex Kennedy in Singapore contributed to this report.
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