NEW YORK: Stock markets around the world were volatile yesterday, with US stocks down following weak data on factory activity, the latest in a series of indicators pointing to weak growth, while Europe was flat near its lowest levels of the year.
Early US stock trading indicated a rebound following a steep decline in Wednesday’s session, but turned lower following the data.
Crude oil rebounded, though it remains sharply lower on the week.
With the decline, US shares extended their drop on the week and the S&P briefly broke under its 50-day moving average for the first time this year, a signal that the market’s uptrend could be in peril.
The S&P 500 was on pace to post its worst week since June 2012, though it remains up 8.3 percent for 2013. Meanwhile the Dow is down 1.9 percent on the week, and up 11.3 percent on the year.
US Treasury bonds gained as the soft economic data and losses in the stock market kept up investors’ demand for safe-haven investments. The benchmark 10-year US Treasury note was up 1/32, the yield at 1.6949 percent.
The prospect of lower global growth, and with it weaker demand for goods used in industrial production, has weighed heavily on the commodity markets where copper and oil are near multi-month lows. Investors sought bargains in oil, sending Brent crude up 1.6 percent after recently touching its lowest levels since last July. US crude was up 1.5 percent, though it remains sharply down on the week.
Gold rose 0.9 percent, on track for its third daily rise. Still, following a massive plunge on Monday, it is down more than 6 percent this week. “Investors who value physical gold over paper gold, have viewed these low prices as a buying opportunity,” said Edmund Moy, chief strategist at gold provider Morgan Gold, adding that sales of new gold coins from the US Mint had jumped in April.
In Europe’s debt markets, investors shrugged off the growth worries and instead focused on the likelihood they would prompt a rate cut by the region’s central bank.
The better tone allowed Spain to sell 4.7 billion euros ($ 6.1 billion) of new bonds at lower borrowing costs than at recent auctions as investors snapped up the high-yielding debt.
“Today’s well-received auction... underscores the extent to which peripheral euro zone debt markets are almost immune from growing concerns about economic growth,” said Nicholas Spiro, managing director of consultancy firm Spiro Sovereign Strategy Ltd.
German Bund futures were flat at 146.22 after the debt sale, but were supported by the expectations of loose central bank monetary policy.
Demand rose on Wednesday after comments from European Central Bank policymaker Jens Weidmann, who stoked a belief that interest rates could fall if economic data remains weak.
