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GLOBAL MARKETS-Selloff slugs Europe as stocks head for worst losing streak since 2013

Published 26/10/2018, 10:35 pm
© Reuters. GLOBAL MARKETS-Selloff slugs Europe as stocks head for worst losing streak since 2013
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* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh

* Bearish tone to earnings in Europe

* MSCI ACWI set for worst weekly run of losses since 2013

* S&P futures down over 1 pct, Nasdaq futures down over 2 pct

* US GDP data awaited

By Ritvik Carvalho

LONDON, Oct 26 (Reuters) - World stocks slid lower on Friday and were set to post their worst weekly losing streak in more than five years, as anxiety over corporate profits added to fears about global trade and economic growth.

European shares tracked U.S. stock futures lower after Alphabet (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN)'s earnings missed expectations, further sapping risk appetite as European earnings also disappointed.

The leading index of euro zone stocks .STOXX50E fell 1.7 percent. Germany's DAX .GDAXI was also down 1.7 percent and France's CAC 40 .FCHI down 2.1 percent. .EU

The pan-European STOXX 600 .STOXX index was down 1.3 percent.

The MSCI All-Country World Index .MIWD00000PUS , which tracks shares in 47 countries, was down half a percent after trading began in Europe. It was set for its fifth straight week of losses, its worst losing streak since May 2013.

"Expectations for U.S. company earnings are quite high, so whenever they are not being met, the reactions are quite severe," said Miraji Othman, credit strategist at BayernLB.

"We have grown used to solid numbers, 18 percent revenue growth, 25 percent revenue growth and so on. The valuations have become quite ambitious."

S&P E-mini futures ESc1 slumped 1.2 percent and Nasdaq futures were down 2.2 percent, potentially setting up a rough session for U.S. markets.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped one percent, erasing gains made in the opening hour and hitting its lowest level since February 2017. The Chinese yuan slid past a key level, refocusing attention on slowing growth in the world's second-biggest economy.

The MSCI Asia index has been bruised by a sell-off in the past several days, and is on course for its fifth weekly loss - its longest losing streak since 2015. It has fallen more than four percent this week.

Chinese shares were pulled lower and the yuan CNY=CFXS fell past 6.96 to the dollar, touching its weakest level against the dollar since December 2016.

The blue-chip index .CSI300 lost 0.7 percent and the Shanghai Composite was 0.2 percent lower. In Hong Kong, the Hang Seng index .HSI was 1.1 percent lower, with tech shares .HSCIIT dropping 3.13 percent.

Tech firms also fell in South Korea, where the broader market .KS11 slid 1.75 percent. The Kospi had earlier touched its lowest level since December 2016.

Australian shares ended flat .AXJO . Japan's Nikkei stock index .N225 closed 0.4 percent lower, ending the week down 5.98 percent.

Financial markets have been whipsawed in recent sessions amid concern over global growth created by Sino-U.S. trade frictions, a mixed bag of U.S. corporate earnings, Federal Reserve rate increases and an Italian budget dispute.

Bear markets - a price drop of 20 percent or more from recent peaks - have increased across indexes and individual stocks since the start of this year. first, and most important (worry) is that Fed tightening and fading fiscal stimulus will cause the US economy to take a turn for the worse ... The second is that China's economy will continue to struggle," analysts at Capital Economics said in a note to clients.

"As we have been arguing for a while now, these worries are likely to get worse over the next twelve months or so."

MIND THE GAP

In currency markets, the euro fell after European Central Bank President Mario Draghi said the bank's 2.6 trillion-euro ($2.96 trillion) asset purchase program would end this year and interest rates might rise after next summer, despite fears about the monetary union's economic and political future. single currency EUR= was 0.3 percent lower at $1.1345.

The dollar was off 0.3 percent against the yen at 112.04 JPY= . The dollar index .DXY , which tracks the U.S. currency against a basket of six major rivals, was 0.1 percent higher at 96.788.

Traders expect a strong reading of U.S. gross domestic product data on Friday, which could see the dollar strengthen.

"Today's robust U.S. GDP will illustrate to the market the deep division between the U.S. and the euro zone when it comes to growth performance," said Commerzbank (DE:CBKG) analyst Thu Lan Nguyen.

The British pound fell to its lowest in two months against the dollar, as doubt grew about whether the UK and the European Union can clinch a Brexit deal. GBP/

Bloomberg, citing people familiar with the matter, reported on Friday that Brexit talks were on hold because Prime Minister Theresa May's cabinet was not close enough to agreement on how to proceed.

U.S. Treasury yields fell as equity markets plunged. The 10-year yield US10YT=RR fell to 3.0849 percent compared with its U.S. close of 3.136 percent on Thursday.

Oil prices headed for a third weekly loss after Saudi Arabia warned of oversupply and the slump in stock markets and concern about trade clouded the outlook for fuel demand. O/R

U.S. crude CLc1 dipped 1.37 percent to $66.43 a barrel. Brent crude LCOc1 fell 1.1 percent to $76.07 per barrel.

Spot gold XAU= ticked up 0.3 percent to $1,235.52 per ounce. GOL/

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