Sun, Apr 15, 2012 - Page 10 News List

Global growth concerns pummel US stock markets

NEW PROBLEMS?Spanish banks borrowed a record-high amount from the ECB last month, sparking fears that the country may be the next EU member that needs a bailout

AFP, New York

US stocks closed out a miserable week with steep losses on Friday as worries about growth in the US, China and Europe eclipsed a solid start to the corporate earnings season.

All three main stock indices lost more than 1 percent on Friday, snapping a two-day rally as investors fretted about Spain’s rocky finances amid spiking borrowing costs.

The Dow Jones Industrial Average finished at 12,849.59 points, down 1.61 percent on the week.

The S&P 500 index, a broad measure of the markets, shed 2 percent for the week at 1,370.26.

That was its biggest weekly decline so far this year “as European sovereign debt fears and disappointing US data weighed,” analysts said.

The technology-laden NASDAQ tumbled 2.25 percent over the week, landing at 3,011.33.

“Looks like the steam has run out of Wall Street’s sail,” Karee Venema at Schaeffer’s Investment Research said.

According to the company, “the last three Friday the 13ths have been down days” and Friday’s action made it four in a row.

Official data revealed on Friday that borrowing by Spanish banks from the European Central Bank (ECB) hit a new record high last month as they snapped up emergency cheap loans.

The figures from Spain’s central bank were a sign of weak confidence in Spain’s troubled financial sector, with commercial banks turning to the ECB because they are struggling to borrow on interbank lending markets.

“Worries about Spain have replaced worries about Greece,” 24/’s Paul Ausick said.

Investors fear Spain will become the next eurozone country to need an international bailout after Greece, Ireland and Portugal.

News that China’s emerging economy grew at its slowest pace in almost three years in the first quarter also frayed nerves.

China said on Friday its economy grew by 8.1 percent in the January-March period, well below the 8.9 percent annual rate in the last quarter of last year.

IHS Global Insight analysts said they still believed that China would achieve a “soft landing” as it tries to control inflation.

“Nevertheless, the risk of a sharper slowdown has increased with this report,” Paul Edelstein and Nigel Gault said in a research report. “The primary channel linking the US and Chinese economies is our export sector. From that standpoint, slower Chinese growth poses a real, but limited risk to the US economy.”

The health of the US economy looked murkier than it had for some time after a weak jobs report for last month, released when markets were closed on Friday, cast a pall over trading this week.

This story has been viewed 2731 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top