World Stock Market Review By Nirmal Bang
U. S. stocks fell for a fourth day, the longest losing streak for the Standard & Poor’s 500 Index since May, as reports on job losses and factory orders spurred concern that the economy is struggling to recover.
ADP Employer Services said employers cut 298,000 jobs in August, while growth in factory orders trailed forecasts. The decline in payrolls reported by ADP exceeded the median economist estimate of a loss of 250,000, according to a Bloomberg survey. A Bloomberg survey of economists shows expectations the unemployment rate rose to 9.5 percent in August from 9.4 percent a month earlier.
Bank shares slid and Treasuries gained, sending 10-year note yields to the lowest level in more than seven weeks, after the Federal Reserve expressed “considerable uncertainty” about the strength of the economic recovery. A measure of banks in the S&P 500 sank to a one-month low as Fed officials said there’s a “sizable risk” the industry faces more credit losses.
U. S. Treasury Secretary Timothy Geithner said the Group of 20 nations has been “very successful” in helping to end the global recession and cautioned that it’s too early to remove policies aimed at boosting growth. Geithner spoke as he prepared to leave for a meeting of Group of 20 finance ministers and central bankers Sept. 4-5 in London. The officials are laying the groundwork for a summit meeting later this month in Pittsburgh, where leaders will discuss measures to overhaul supervision of the financial system. Geithner said talks in London will include the start of a discussion on bank capital standards as well as a “framework” for how the world’s largest industrial and developing economies can cooperate to remove policies to stimulate growth.
China’s stocks rose for a third day, led by commodity producers, after gold prices rallied and Alcoa Inc. increased its forecast for global aluminum consumption. Japanese stocks dropped for a second day, as greater-than-estimated U. S. job cuts and the weakening dollar stoked concern profits at automakers will be hurt.
The International Monetary Fund, which in July outlined plans to issue bonds to member countries, signed an agreement with China under which the Asian nation would buy as much as $50 billion of the notes. It enables China to take part in a $500 billion increase in the lender’s resources to which the Group of 20 industrial and developing nations agreed in April. The notes will be denominated in Special Drawing Rights, or SDRs, the unit of account that China has said should have a greater role in the global economy over time to reduce the U. S. dollar’s dominance.
The market may not be able to run before the meeting of 20 nations FM to discus about Capital adequacy for banks, timetable for removal of stimulus and restriction on bonuses to high profile employees of bank to be held on 4th and 5th Sep.