GREECE is set to miss its deficit targets for both this year and next, its finance ministry admitted last night. Finance minister Evangelos Venizelos said that the deficit is due to come in at 8.5% of GDP this year, almost a whole percentage point above the 7.6% target agreed with Greece’s international lenders. It will miss the target by less next year, he claimed, forecasting a deficit of 6.8% of GDP versus the 6.5% target. However, the Greek cabinet did manage to rubber-stamp its 2012 austerity budget.
Consumer spending in the US slowed in August as incomes unexpectedly dropped for the first time in almost two years, forcing households to dip into savings. Purchases rose 0.2% after a 0.7% increase in July, Commerce Department figures showed last Friday. Incomes decreased 0.1%, the first decline since October 2009. Economists had forecast incomes would rise 0.1%, according to a Bloomberg survey.
Signs of stability in China’s manufacturing industry in September may ease concern the world’s second-largest economy will suffer a slump in economic expansion that escalates the risk of another global recession. The Purchasing Managers’ Index published October 1st by the China Federation of Logistics and Purchasing rose for a second month, to 51.2, with export orders gaining and an inflation measure – factories’ input costs – moderating.
Asian stocks fell, extending the regional benchmark index’s biggest quarterly decline in three years, after US consumer spending slowed as incomes unexpectedly dropped, souring the earnings outlook for exporters.
Futures on the Standard & Poor’s 500 Index lost 0.7%. The S&P index fell 2.5% on Friday, sending the measure to its biggest quarterly drop since 2008, after reports from China and Germany fuelled concerns the global economy is slowing.
European shares are set to fall sharply today after their worst quarterly performance since late 2008, as investors shun riskier assets as draft budget figures show Greece they will miss a deficit target set just months ago.
THE EURO fell to an eight-month low against the dollar before European finance ministers gather today to weigh the threat of a default in Greece, which is making fresh budget cuts to secure an international bailout.
Oil extended declines in New York after closing last week at a one-year low on speculation that a slowing US economy and Europe’s debt will curb fuel demand. Futures slipped as much as 1.6% after dropping 17% since the end of June in the worst quarter for oil since 2008.
Worries that a weakening economy will hurt industrial demand hit commodities such as copper, which extended losses for a fourth session in a row after its worst quarter in nearly three years. Gold strengthened further overnight as investors looked to the safe-haven metal, which posted its the biggest quarterly gain this year.