Signs of distress in financial markets are gathering force as concern over the state of the global economy deepens, Bloomberg reports.
U.S. shares have been retreating, joining a tumble in European and emerging market stocks, while Treasuries gained and the rate on Germany’s 10-year bonds are at the lowest since April. Yields on bonds for Europe’s most-indebted countries rose, while the cost of protecting European banks’ and insurers’ senior debt is on its worst run since March 2013.
Oil, meanwhile, continues to be traded around $30 a barrel, while spot gold has been on its longest winning streak since March.
“Investors can’t make up their minds about the global economy, but the risk of recession and deflation is rising,” says Francois Savary, the chief investment officer of Prime Partners SA, a Geneva-based investment manager. “It’s not enough that valuations have receded quite significantly and earnings haven’t been too bad—sentiment is very low and there isn’t much visibility right now. That’s frightening.”
The Standard & Poor’s 500 Index sank 3.1% last week as concern about everything from China to oil and interest rates led strategists to lower their year-end projections for the benchmark gauge. In Europe, data today showed the Sentix investor confidence index dropped to the lowest in more than a year in February. Oil failed to hold gains after Saudi Arabia held talks Sunday with Venezuela, which is trying to drum up support for a coordinated oil-output cut to buttress prices. Most Asian markets were closed for the lunar New Year holidays.
As of 9:35 this morning, the S&P 500 was down 1.6%, while the Nasdaq 100 Index sank 2% after slumping to the lowest level since Aug. 25 on Friday.
