BANGKOK – Expectations that the U.S. Federal Reserve will start to phase out its monetary stimulus had a mostly negative impact on global stock markets Friday.
A fall in weekly U.S. jobless claims to a near six-year low reinforced views that the economy is strong enough to withstand less extraordinary support from the Fed. The Labor Department reported Thursday that weekly claims slid 15,000 last week to 320,000, the lowest level since October 2007.
Analysts said the sharp fall makes it more likely that the Fed will scale back its $85 billion-a-month purchases of government bonds in September. The purchases have helped lower interest rates to spur borrowing and economic growth after the global financial crisis of 2008 sparked a recession.
The stimulus program has been a boon to stocks, into which investors have plowed money in search of investment returns that outpace bonds. Traders have come to view a withdrawal of the Fed program as a negative for stocks even in the face of evidence that the U.S. economy is improving.
In early European trading, Britain’s FTSE 100 fell 0.1 per cent to 6,479.65. Germany’s DAX dropped 0.3 per cent to 8,353.71 and France’s CAC-40 lost 0.1 per cent to 4,087.56.
Wall Street, though, appeared set to reverse some of Thursday’s losses. Dow Jones industrial futures were up marginally to 15,080. S&P 500 futures advanced 0.2 per cent to 1,658.40.
Asian stock markets sustained moderate losses. Japan’s Nikkei 225 index fell 0.8 per cent to close at 13,650.11. Australia’s S&P/ASX 200 lost 0.8 per cent to 5,113.90. Benchmarks in the Philippines, Indonesia and India also fell.
Hong Kong’s Hang Seng shed 0.1 per cent to 22,517.81. South Korea’s Kospi declined 0.2 per cent to 1,920.11.
Mainland Chinese share prices briefly surged in a trading frenzy blamed on one brokerage’s mistaken computerized buying orders.
Volume on the Shanghai Stock Exchange soared to 54 per cent above Thursday’s level, with 1.5 billion shares changing hands. The main market index jumped 6.5 per cent before ending the day down 0.6 per cent.
A brokerage, Everbright Securities, said in a statement it suffered an unspecified problem with a computerized trading system. Everbright’s computers sent 7 billion “wrong instructions” to purchase shares, according to the state-run China News Service.
Everbright asked to have its trades cancelled, CNS said. The exchange, however, said on its website that transactions already closed would be cleared normally.
Negative corporate news out of the U.S. also led to frayed nerves. Wal-Mart, the world’s largest retailer, cut its profit and revenue forecasts for 2013. It also reported second-quarter results that missed Wall Street’s estimates.
Cisco Systems announced plans to cut 5 per cent of its workforce, roughly 4,000 employees, as sales slow. Cisco’s announcement led to selling in other technology stocks because the company is regarded as a bellwether for the industry.
Benchmark oil for September delivery was down 19 cents to $107.15 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 48 cents to $107.33 late Thursday in New York.
In currencies, the euro fell to $1.3332 from $1.3349 late Thursday. The dollar rose to 97.50 yen from 97.07 yen.
AP Business Writer Joe McDonald contributed from Beijing.