September 26, 2023

World Markets Dogged by Recovery Fears

LONDON (AP) — Worries over the state of the global economic recovery weighed on stock markets Monday but the euro managed to claw back some lost ground despite the weekend arrest of Dominique Strauss-Kahn, the head of the International Monetary Fund.

Strauss-Kahn’s arrest in New York on charges he sexually assaulted a hotel maid had weighed on Europe’s single currency as trading got under way in Asia, but investors soon concluded that it was unlikely to affect a meeting of European finance ministers in Brussels later.

Strauss-Kahn had been scheduled to join the meeting to put the finishing touches to a euro78 billion ($111 billion) bailout of Portugal. The ministers will also consider Greece’s economic plight and whether to extend it any more help.

By early afternoon London time, the euro was trading 0.3 percent higher at $1.4119. Earlier, it had fallen as far as $1.4046, its lowest level since March 29.

Stock markets were faring much worse.

In Europe, the FTSE 100 index of leading shares was down 0.9 percent at 5,873 while Germany’s DAX fell 1.3 percent to 7,307. The CAC-40 in France was 1.5 percent lower at 3,961.

Wall Street was poised for a lower opening, too — Dow futures fell 0.4 percent at 12,507 while the broader Standard Poor’s 500 futures fell an equivalent rate to 1,328.

Doubts about the strength of economic recovery, particular in the U.S., have weighed on markets in the past couple of weeks after they enjoyed their best first quarter since 1998.

The Standard and Poor’s 500 stock index, a broad market benchmark, is up just 1 percent this quarter after jumping 5.4 percent in the first three months of the year. That weaker performance is in large part because of conflicting data about the health of the U.S. economy.

Investors will be closely monitoring a speech from U.S. Federal Reserve chairman Ben Bernanke.

“Bernanke’s comments on the outlook for the U.S. economy will be meticulously scrutinized early this afternoon, as will sales updates from a number of U.S. retailers,” said Ben Critchley, a sales trader at IG Index. “At present Friday’s sell-off across the Atlantic is set to continue.”

Earlier in Asia, Japan’s Nikkei 225 index dropped 0.9 percent to close at 9,558.30 with banking shares incurring losses following comments last week by Chief Cabinet Secretary Yukio Edano suggesting that Tokyo Electric Power Co. will need help repaying its debts in the wake of March’s devastating earthquake and tsunami.

South Korea’s Kospi lost 0.8 percent to 2,104.18, and Hong Kong’s Hang Seng shed 1.4 percent to 22,960.63.

Mainland Chinese shares lost ground Monday following the latest increase in the central bank’s reserve requirement for banks, which was announced Friday. The benchmark Shanghai Composite Index lost 0.8 percent to 2,849.07 and the Shenzhen Composite Index of China’s smaller, second exchange lost 0.2 percent to 1,198.72.

Commodities have been badly hit recently by fears over the global recovery and oil prices took another dive Monday.

Benchmark crude for June delivery was down $1.72 to $97.93 a barrel in electronic trading on the New York Mercantile Exchange.


Pamela Sampson in Bangkok contributed to this report.

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