TOKYO – World stock markets drifted lower Tuesday amid concern over the world economy’s outlook and the Federal Reserve’s rate hike plans.
Germany’s DAX was down 0.3 percent at 10,787.99 and France’s CAC 40 shed 0.4 percent to 4,891.90. Britain’s FTSE 100 dropped 0.4 percent to 6,269.43.
Futures pointed to a flat start on Wall Street: Dow futures were flat while S&P 500 futures were down 0.1 percent.
Investors were spooked by more signs of a slowdown in the world economy. China’s inflation rate fell to an annual 1.3 percent in October from 1.6 percent the month before. Low inflation is a sign of economic weakness, though it should give the central bank space to offer more stimulus.
Earlier, the Organization for Economic Cooperation and Development’s warned that slower growth in emerging market economies and world trade has weakened global growth to around 2.9 percent this year. That is well below the long-term average, raising doubts for the near-term outlook.
“Global GDP growth will remain lackluster in 2015-17 as the ongoing gradual slowdown in China continues,” Moody’s Investors Service said in a commentary. “Global economic growth will not support significant reductions in government debt or increases in interest rates by major central banks. As a result, authorities lack the ample fiscal and monetary policy buffers usually created at the top of the business cycle, leaving growth and global financial stability particularly vulnerable to shocks for an extended period of time.”
Unexpectedly strong American jobs data for October have reinforced expectations that the U.S. Federal Reserve will raise short-term interest rates at its December. The Fed’s benchmark rate has been close to zero since the 2008 financial crisis. Low interest rates have been a boon for stock markets for several years.
Japan’s Nikkei 225 regained lost ground to edge 0.2 percent higher, closing at 19,671.26. But most other regional markets fell. Hong Kong’s Hang Seng dropped 1.4 percent to 22,401.70. The Shanghai Composite Index slipped 0.2 percent to 3,640.49 and South Korea’s Kospi lost 1.4 percent to 1,996.59. Australia’s S&P/ASX 200 fell 0.4 percent to 5,099.20. Markets in Southeast Asia fell.
Benchmark U.S. crude was up 13 cents to $44.00 a barrel in electronic trading on the New York Mercantile Exchange. It lost 42 cents to $43.87 a barrel on Monday.
The dollar edged higher to 123.19 yen from 123.15 yen on Monday. The euro slipped to $1.0729 from $1.0754.
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