March 5, 2021

Global Markets Mixed After Big Sell-Off

The turmoil of recent weeks showed no signs of letting up, with gold hitting another record high and the currency market jolted by action from the Swiss authorities to weaken the franc, which has soared because of its role as a safe haven.

European shares posted modest gains after a withering retreat Monday that knocked more than 4.1 percent off the broad market. In morning trading, the Euro Stoxx 50 index, a barometer of euro zone blue chips, and the FTSE 100 index in London were both up around 1 percent.

Concerns about the outlook for the global economy and the sovereign debt crisis that is haunting the euro zone have created conditions worryingly similar to those of the sell-off that followed the collapse of Lehman Brothers in 2008, Deutsche Bank’s chief executive, Josef Ackermann, said Monday.

Asian shares continued to lose ground. Having fallen 1.9 percent on Monday, the Nikkei 225 stock average in Japan sank an additional 2.2 percent on Tuesday, taking it to 8,590.57 points, its lowest close since April 2009.

The main Sydney market index, the SP/ASX 200, fell 1.6 percent, and the Shanghai composite index fell 0.4 percent. In Hong Kong, the Hang Seng index bucked the trend, rallying from a loss to close 0.5 percent higher.

Standard Poor’s 500-stock index futures fell, indicating that the market would likely sag when Wall Street reopens. The crucial American market indexes had slumped more than 2 percent on Friday after jobs data for August showed that the United States economy had added no jobs.

“Key economic data continues to disappoint as global business sentiment surveys weakened further and the U.S. employment report printed well below market expectations,” analysts at Barclays Capital commented in a research note.

“Increasing concerns over global growth appear to have halted the brief rally in risk assets in the last week of August,” they noted, and investors are likely to remain edgy, and financial markets volatile, over the next few weeks.

Policy makers around the region voiced similar concerns on Tuesday.

“Asia will not be immune to a global slowdown,” said Tharman Shanmugaratnam, the finance minister of Singapore, Reuters reported. Singapore’s small, open economy is particularly susceptible to the ups and downs of the global economy.

“We are already at stall speed in the U.S. and Europe, which means we are now more likely than not to see a recession,” he said.

Separately, Huang Guobo, the chief economist at China’s currency regulator, the State Administration of Foreign Exchange, said the pace of growth in China could slow to less than 9 percent next year, partly because of what is happening in the rest of the world.

“The Chinese economy is facing serious challenges despite strong growth,” said Mr. Huang, Reuters reported. “The weakening global demand for Chinese exports will be a challenge.”

In Zurich, the Swiss National Bank said it was setting a minimum value of 1.2 francs per euro and was prepared to spend an “unlimited” amount to defend it. The central bank was acting to help the country’s exporters, who fear being priced out of foreign markets by the strong franc.

The euro immediately rallied, rising as high as 1.24 Swiss francs from 1.11 francs late Monday. The euro has traded as low as 1.03 francs this summer.

Currency trading, which had been relatively quiet, was thrown into upheaval as the market sought a new equilibrium. The euro rose to $1.4184 from $1.4098 late Monday, while the British pound gained to $1.6125 from $1.6118. The dollar rose to 77.35 yen from 76.89 yen and soared to 0.8475 Swiss francs from 0.7872 francs.

Gold futures climbed to above $1,923 an ounce in Asian trading before on Tuesday — a new nominal record high for the precious metal — before easing back to $1,889.60.

Government bond prices were little changed, with the yield on the United States 10-year note at 1.97 percent. In Asian trading, the yield fell to 1.91 percent, a record low, according to Bloomberg News.

Bettina Wassener reported from Hong Kong.

Article source: http://feeds.nytimes.com/click.phdo?i=82e4a9919b53ccca2189c8a252e672fd

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