World stocks down as timid rebound falters

Traders and financial professionals work ahead of the closing bell on the floor of the New York Stock Exchange.
Traders and financial professionals work ahead of the closing bell on the floor of the New York Stock Exchange.PHOTO: AFP

LONDON (AFP) - World stock markets fell on Wednesday (Oct 24) after failing to sustain an earlier timid rebound as geopolitical concerns again got the better of investor nerves.

Risks stretching from US tensions with Russia and Saudi Arabia to trade issues with China, as well as Italy's budget stand-off with the European Union have been keeping markets on their toes.

With the exception of London, key European markets ended the day lower, having earlier taken heart from some strength in Asia and a solid opening on Wall Street.

But as American stock prices turned down, mostly because of unconvincing corporate results, so did shares in Europe.

London's FTSE index resisted the downward trend thanks to a weak pound which helps to boost the earnings of multinationals who generate sales in other currencies .

'Huge anxiety' 

"There is clearly still a huge amount of anxiety in the markets right now," noted Oanda senior market analyst Craig Erlam.

Investors around the world have been fleeing riskier assets in search of safety as a wave of negative issues dominates the news.

The euro on Wednesday hit a two-month low against the dollar, before paring early losses, while oil prices rebounded from the previous day's heavy downturn.

Oil's main Brent and WTI contracts plunged more than four percent Tuesday after Saudi Energy Minister Khalid al-Falih said the major producer would boost output and spare capacity to help maintain supplies.

Prices had hit four-year highs this month with sanctions due to be imposed on Iran, while Venezuela remained in political and economic crisis and US data pointed to a pick-up in demand.

Traders reacted Wednesday also to news that business growth in the 19-nation eurozone dropped in October to the lowest point in two years, hit by falling exports.

In a first estimate, data monitoring company IHS Markit said slowing exports extended to the service sector, with companies' expectations of future growth at the lowest level in nearly four years.

Investors are also keeping an eye on eurozone member Italy after the EU rejected the populist government's big-spending budget, the first time it has turned a member away over spending rules violations.

With Rome likely to ignore the decision, the move puts the two on course for a clash, just as the EU struggles to reach a deal for Britain to leave the bloc with a deadline imminent.