Global stocks slide amid concerns about world economy
MANILA, Philippines - Global stocks fell on Thursday as investors worried about the health of the global economy given the Federal Reserve's cautious stance about raising its interest rates. Financial markets were closed for holidays in China, Hong Kong and Taiwan.
In Europe, Britain's FTSE 100 slid 0.9 percent at 6,248 and Germany's DAX fell 1.2 percent to 10,091. France's CAC 40 lost 0.9 percent to 4,410.
Wall Street looked set for a bleak opening, with the Dow futures down 0.2 percent and S&P futures down 0.3 percent.
"The Fed being more cautious about tightening rates should negatively impact stocks, since they are worried about the state of the economy and its ability to withstand higher interest rates," said IG Market Strategist Bernard Aw. "Make no mistake, the cautious undertone pervades the financial markets."
The president of the European Central Bank warned in a speech Thursday that the eurozone economy needs governments to make more reforms if it is to see higher growth. Mario Draghi noted the central bank could not heal the economy on its own and that reforms are needed in a region where aging demographics risks weighing on long-term growth.
Earlier, in Asia, Tokyo's Nikkei 225 shed 1 percent to 16,668.41 after the government reported that core domestic private machinery orders, excluding volatile orders for ships and electric utilities, fell 11 percent in April from the month before, suggesting prolonged weakness in capital investment. Foreign machinery orders also fell, 6.9 percent month-on-month in April.
Bank of Korea surprised investors by slashing its key interest rate to a record low 1.25 percent for the month of June. The move is the first rate cut in Asia's fourth-largest economy in a year. Most market analysts had expected the bank to lower interest rates later in the year, anticipating slower growth in the second half. Low oil prices have hit South Korea shipyards and other major exporters.
Australia's S&P ASX 200 slipped 0.2 percent at 5,361.90. South Korea's KOSPI was 0.1 percent lower at 2,024.17. The Philippines' PSE index was down 2.4 percent at 7,536.65. Singapore's FTSE Strait Times index shed early gains, losing 0.4 percent at 2,852.48.
U.S. crude shed 41 cents to $50.82 a barrel in electronic trading on the New York Mercantile Exchange. It jumped 87 cents on Wednesday. Brent crude, the benchmark for international oil prices, fell 48 cents to $52.03 a barrel in London. On Wednesday, it rose $1.07.
The dollar fell to 106.51 yen from 106.94 yen the previous day. The euro dropped to $1.1337 from $1.1397.