News Column

Global shares fall for third day on growth worry

May 16, 2014

Global shares eased for a third day on Friday, on course for their longest losing streak in over a month, and yields on some lower-rated eurozone bonds rose as a gloomier economic picture in Europe led investors to shed riskier positions.

Weaker-than-forecast GDP figures from eurozone countries such as Italy, France and Portugal on Thursday challenged market expectations for an economic recovery in the bloc, which have boosted shares and lower-rated bonds in the region since last summer.

Sharp sell-offs in US and Japanese shares and a fall in safe haven Treasury yields strengthened the feeling global investors were starting to question a 20 per cent rally in global shares since June 2013, which propelled a key world index to 6-1/2 year highs earlier this week. "There's a general rotation and fall in risk appetite," Andrew Parry, chief executive officer at Hermes Sourcecap, which manages €2.4 billion ($3.3 billion) worth of assets.

The MSCI All-Country World index was down 0.2 per cent, falling for a third day and further retreating from 418.24, a high touched on Thursday and previously not seen since November 2007. Futures pointed to a flat to lower start for US indexes, which have fallen for the past two sessions. Greek and Portuguese 10-year government bond yields rose, hit by nervousness around Greek government stability and weaker-than-expected growth data for Portugal. Italian, Spanish and Irish bond yields reversed early advances to trade slightly lower.

Yields on benchmark German bonds, regarded as a safe-haven asset due to the country's strong economy, hovered close to a one-year low while the euro consolidated just above a 2-1/2-months trough against the dollar.

In commodities, gold struggled below $1,300 an ounce after US jobs and factory data indicated brighter prospects for that economy, hurting the metal's appeal as an investment hedge.

Brent futures held above $109 a barrel as fresh tensions over Ukraine kept them on course for their biggest weekly rise since mid-April, but returning Libyan supply capped gains.

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Source: Khaleej Times (United Arab Emirates)

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