Stocks fell from Tokyo to Paris and the dollar rose as the fastest economic growth in a year in China stoked speculation that government stimulus measures will be removed, while European earnings disappointed investors.
The Shanghai Composite Index fell the most this month and the MSCI World Index of 23 developed countries slid for a third day, losing 0.5 per cent at 8:15 a.m. in New York. Futures on the Standard & Poor’s 500 Index erased declines after Dow Chemical Co. and McDonald’s Corp. earnings exceeded estimates and Xerox Corp. forecast higher profit. The dollar strengthened against 14 of the 16 most-traded currencies tracked by Bloomberg.
China’s economy grew 8.9 per cent in the third quarter, the fastest pace in a year, after $586 billion in stimulus spending.
Inflation expectations are increasing, statistics bureau spokesman Li Xiaochao said at a briefing in Beijing today. Ericsson, the world’s biggest maker of mobile-phone networks, announced a third-quarter profit that trailed analysts’ estimates, after 77 per cent of companies in the MSCI World beat projections.
“Countries including China may withdraw stimulus,” Peter Westin, chief strategist at Moscow-based Aton, said in an interview.
“This will reduce liquidity, which is the main driver for global markets this year.”
Europe’s Dow Jones Stoxx 600 Index slid 1.2 per cent, the biggest drop in almost three weeks.
Ericsson, Credit Suisse
Ericsson slumped 7.4 per cent in Stockholm after the company said its third-quarter net income slid 71 per cent to 810 million kronor ($118 million) as clients slashed spending. Analysts had estimated profit of 1.97 billion kronor in a Bloomberg survey.
Credit Suisse Group dropped 2.3 per cent in Zurich as Switzerland’s biggest bank by market value reported third- quarter profit that disappointed some investors.
Futures on the S&P 500 were little changed after earlier dropping 0.6 per cent.
Dow, the biggest US chemical company, said third-quarter profit rose 86 per cent. Xerox, the largest maker of high-speed color printers, raised its forecast for earnings this year.
McDonald’s, the world’s largest restaurant company, added 2.2 per cent in pre-market New York trading after reporting third-quarter profit of $1.15 a share, beating the average analyst estimate by 4 cents.
3M rose 2.3 per cent. The maker of 55,000 products from Post-It Notes to safety equipment posted profit that topped analysts’ estimates and increased its 2009 forecast.
Morgan Stanley
US stocks tumbled in the final hour of trading yesterday after analyst Dick Bove at Rochdale Securities downgraded Wells Fargo & Co., erasing a rally spurred by better-than-estimated results at Morgan Stanley and Yahoo! Inc.
Ebay, the most visited US e-commerce site, sank 3.3 per cent in pre-market New York trading today after its earnings forecast missed estimates. Amgen, the world’s largest biotechnology company, dropped 2.5 per cent as third-quarter sales fell and US regulators asked for new studies on its experimental bone drug.
The S&P 500 is trading at its highest valuation since 2004 relative to reported earnings after climbing 60 per cent since March 9 as the government lent, spent orx guaranteed $11.6 trillion to combat the worst recession since the 1930s.
Worldwide, governments from Beijing to Berlin spent $12 trillion to help end the global contraction, according to data from the Washington-based International Monetary Fund.
The Shanghai Composite dropped 0.6 per cent, the steepest decline since September 28.
‘Sweet spot’
“It is clear that time is running out for the sweet spot,” Lee Hardman, a currency economist at Bank of Tokyo Mitsubishi UFJ in London, wrote in an e-mailed note today.
Following today’s GDP release in China, “market sentiment has been soured as the report has turned attention towards when the Chinese will begin to tighten policy,” he said.
The MSCI Emerging Markets Index fell 0.9 per cent.
Russia’s Micex Index slipped 0.8 per cent as oil producers OAO Lukoil and OAO Rosneft slid.
The dollar climbed 0.3 per cent versus the yen and 0.1 per cent against the euro, helping send the Dollar Index 0.3 per cent higher.
The pound declined 0.2 per cent against the US currency after a report showed British retail sales unexpectedly stagnated in September.
Crude oil for December delivery fell 0.7 per cent to $80.82 a barrel in New York trading, retreating from $81.37 yesterday.
