G-20 officials met in Washington and said that they were “committed to a strong and coordinated international response to address the renewed challenges facing the global economy.” The previously unplanned communication suggests authorities are alert to worries among investors, while they stopped short of outlining fresh policies to buoy growth.
The European Central Bank may act to address risks to growth as soon as next month should economic data disappoint, Governing Council member Luc Coene said. “The ECB has never ruled out things beforehand,” Coene replied when asked if an interest-rate cut were warranted. “If the data in early October shows that things are worse than we anticipated we will look at the kind of decisions we have to take for that.”
MARKETS:
More than $3.4 trillion has been erased from equity values this week, driving global stocks into a bear market.
Gloomy comments from the Federal Reserve followed by even gloomier remarks by leading economists terrified the markets yesterday, with benchmarks in the UK, Europe and the US suffering falls of between 3% and 5%. The FTSE 100 in London was nearly 5% down by the end of the session, coming worryingly close to the 52-week low of 5,007 during intraday trade.
ASIAN stocks have declined through the night, and are headed for the biggest weekly drop since 2008. About five shares retreated for every one that gained on MSCI’s Asia excluding Japan Index, helping the gauge to a 10% slump for the week.
US FUTURES rose overnight after the G-20 pledge to tackle rising risks to the global economy, and may signal a rebound from the 3.2% drop suffered by the S&P 500 index yesterday.
EUROPEAN shares look set to rebound today after hitting 26-month lows in the previous session after the Group of 20 economies said they would take all steps needed to calm the global financial system and the euro zone’s rescue fund could be bolstered.
CURRENCIES:
The EURO strengthened 0.5% to $1.3530 in Asia, rebounding from a 0.8% drop yesterday. The shared currency climbed to ¥103.24 yen, the first gain in six days. It yesterday fell as low as ¥102.22, the least since 2001. In a G-20 statement, the euro region committed to expand the powers of a rescue fund by the time of the group’s next gathering, scheduled for October 14th.
ENERGY:
OIL rose to $81.08 a barrel in New York after yesterday sliding to as low as $79.66. Crude is rebounding after OPEC said it will decide whether to cut supply after monitoring the global economy over the next two months and the pace of Libya’s output recovery.
COMMODITIES:
Three-month copper dropped 1.7% in Asian trading, extending yesterday’s 7.5% tumble, the most since October 2008. Nickel dropped 3.7% after plummeting as much as 17% yesterday and zinc declined 1.8%. An index of six metals traded in London sank 6.4% yesterday, the most since May 4, 2010.
