Global Shares Hit by Growth Forecast Cuts

Global shares fell to a six-month trough and Brent crude futures tumbled to their lowest since 2010 on Friday as investors worried about the prospect of a widespread economic slowdown just as U.S. monetary stimulus nears its end.

Assets which depend on economic growth, such as shares and oil, have been hit by a raft of weak indicators from Europe at a time when other big economies, including China, Japan and Brazil face their own hardships.

Meanwhile, the U.S. Federal Reserve is set to wind down later this month the asset purchase program that has boosted markets over the past two years. Many observers doubt the recent stimulus measures unveiled by the European Central Bank will make up for it.

“There has been a barrage of negative thoughts on growth and growth assets,” said Stewart Richardson, a partner at macro hedge fund RMG Wealth Management.

“I believe we’re entering a bear market. We’ve been trying to be short equities and we’ve been focusing our shorts in Europe and small caps,” he said, referring to bets that shares in those markets will keep falling.

The MSCI All-Country World index fell 0.8 percent to its lowest level since April 18 at 403.54 points, taking its loss since the start of the week to 1.9 percent.

The index, which is eyeing its third consecutive weekly fall, has retreated by roughly 7 percent since testing an all-time high last month.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza