World stocks fall on debt woes

World stocks fall on debt woes

 World stocks suffered their biggest weekly loss in almost a year on Friday as investors piled into safe-haven assets on worries about sovereign debt crises on both sides of the Atlantic and data showing meagre growth in the U.S. economy. The Swiss franc, a traditional safe-haven currency, rose to record highs against both the dollar and the euro, and gold soared to a record high above $1,630 per ounce. With four days remaining until the United States hits its debt limit, President Barack Obama on Friday told deeply divided Republicans and Democrats to find a way "out of this mess. Fears that Europe's debt crisis was spreading grew after Moody's Investors Service threatened to downgrade Spain's credit rating. Adding to investor gloom, the government reported the U.S. economy grew at a meagre 1.3 percent annual rate in the second quarter as consumer spending barely rose. The government also said the economy came perilously close to flat-lining in the first quarter, a sharp downward revision from its previous estimate. "It's frustrating for investors and for U.S. citizens to see this unfold in the way it has been," said Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Maryland. "From an overall asset allocation standpoint, in an environment like this, you get bigger moves into cash and safe havens." The Dow Jones industrial average .DJI ended down 96.87 points, or 0.79 percent, at 12,143.24. The Standard & Poor's 500 Index .SPX was down 8.39 points, or 0.65 percent, at 1,292.28. The Nasdaq Composite Index .IXIC was down 9.87 points, or 0.36 percent, at 2,756.38. The S&P 500 fell every day this week, losing 3.9 percent. The CBOE Market Volatility Index .VIX, a gauge of investor fear, jumped as much as 9 percent to its highest level since mid-March before paring its rise. World equities as measured by the MSCI world equity index .MIWD00000PUS fell 0.5 percent. The benchmark index has fallen 2.9 percent this week, its biggest weekly loss since August 2010. European stocks closed out their worst week since March, with the pan-European FTSEurofirst 300 .FTEU3 finishing down 0.7 percent. Emerging market stocks MSCIEF were down 0.7 percent. Even if U.S. lawmakers agree on a last-minute debt limit deal, many investors believe that would not prevent credit ratings agencies from downgrading the United States' triple-A ratings. "We're basically standing on the edge of an abyss, peeking over with the bottom nowhere to be seen. That's the situation facing all financial markets heading into a weekend that could prove to be one of the most crucial in history," said Ben Potter, a strategist at IG Markets.

SAFE HAVENS IN VOGUE

The dollar plunged to an all-time low against the Swiss franc at 0.7853. It also hit a four-month trough against the yen of 76.85 on trading platform EBS, edging close to a record low of 76.25, and heightening worries that Japanese authorities may step in to stem currency strength. The dollar was on track for a monthly loss of about 4.5 percent against the yen, the biggest since December 2008. It shed about 6.4 percent against the Swiss franc in July -- the worst monthly performance since December 2010. Japan Finance Minister Yoshihiko Noda warned about the strong yen, saying he would consider how long Japan could ignore current exchange rate moves without acting. The euro last traded at $1.4376, up 0.4 percent after Moody's placed Spain's Aa2 credit rating on review for possible downgrade. The move followed Thursday's disappointing Italian debt auction, which saw 10-year bonds sold at the highest yield in 11 years. The weak U.S. economic data raised the prospect of further monetary accommodation, boosting demand for gold and U.S. government debt. Spot gold rose as high as $1,632.30 per ounce before easing back to around $1,625. Ten-year Treasury notes were 1-11/32 higher in price, pushing yields to 2.79 percent, and 30-year bonds rose 2-10/32, with yields easing to 4.12 percent. U.S. crude oil settled down $1.74 at $95.70 a barrel. Economic growth "was much weaker than the government had previously estimated and this opens the door for potentially another round of quantitative easing from the Federal Reserve," said Gary Thayer, chief macro strategist at Wells Fargo Advisors in St. Louis.

https://www.financialexpress.com/news/world-stocks-fall-on-debt-woes/824697/0