Global equity markets traded slightly lower yesterday after their worst first-day performance in years as concerns about the global economy weighed on sentiment and pushed traders to seek the relative safety of the low-risk yen.
Crude prices also fell on concerns about the pace of growth in China, the world’s second-largest oil consumer. News that Chinese rail freight volumes logged their biggest-ever annual decline in 2015 added to economic growth worries.
A rally in mining and telecom stocks helped European shares to edge slightly higher in volatile trade, but shares on Wall Street fell after a brief attempt to stay positive.
MSCI’s all-country world stock index fell 0.15 per cent and its emerging markets index fell 0.04 per cent.
On Wall Street, the Dow Jones industrial average fell 52.12 points, or 0.3 per cent, to 17,096.82. The S&P 500 slid 0.99 points, or 0.05 per cent, to 2,011.67 and the Nasdaq Composite lost 2.45 points, or 0.05 per cent, to 4,900.64.
“The main reason for the uncertainty is China, given that company numbers and the macroeconomic picture in Europe and the US have not changed,” said Alessandro Allegri, chief executive of Italian asset manager Ambrosetti Asset Management.
In Europe, the pan-regional FTSEurofirst 300 index closed up 0.44 per cent to a preliminary 1,407.32. But the heavyweight German index closed slightly lower.
The yen climbed to its strongest level since April against the euro and hovered at its highest since October versus the dollar. The Japanese currency is traditionally sought at times of risk aversion.
The yen jumped more than 1 per cent against the euro, rising to 127.75.
Against the dollar, the yen was up 0.3 per cent on the day at 119.06. yen, according to EBS data.
The euro fell 0.92 per cent to $1.0729.
The oil market largely shrugged off rising political tensions in the Middle East. Yesterday, Kuwait recalled its ambassador to Iran after attacks on Saudi missions by Iranian protesters, state news agency KUNA reported.
Global benchmark Brent crude prices were down 74 cents at $36.48 a barrel. US West Texas Intermediate (WTI) crude slipped 48 cents to $36.28.
Long-dated US Treasury yields rose as worries eased a bit over global growth, leading traders to sell some safe-haven US government debt. US 30-year Treasuries were last down 5/32 in price to yield 2.9967 per cent. Benchmark 10-year US Treasury notes were last down 1/32 in price to yield 2.2410 per cent.
Gold rose after a wave of risk aversion due to growth worries in China and rising tensions in the Middle East triggered demand for the metal.
US futures for February delivery rose 0.35 per cent to $1,078.70.