Get 40% Off
👀 👁 🧿 All eyes on Biogen, up +4,56% after posting earnings. Our AI picked it in March 2024.
Which stocks will surge next?
Unlock AI-picked Stocks

GLOBAL MARKETS-U.S. debt fears, data hit world stocks

Published 07/29/2011, 10:15 AM
Updated 07/29/2011, 10:20 AM

* World stocks on track for worst week since August 2010

* Threats of Spanish downgrade, U.S. default, data weigh

* Swiss franc, gold rally to record highs (Updates prices, adds comment, details, changes byline, dateline, previous LONDON)

By Wanfeng Zhou

NEW YORK, July 29 (Reuters) - World stocks headed for their biggest weekly loss in almost a year on Friday while the U.S. dollar fell after efforts to stave off a U.S. debt default suffered a new blow and data showed meager growth in the U.S. economy.

Investors piled into perceived safe-haven assets, pushing the Swiss franc to record highs against both the dollar and euro. Gold prices also rallied to a fresh record high above $1,630.

U.S. Republican leaders scrambled on Friday to rescue their budget deficit-cutting plan after conservatives mounted a rebellion that heaped uncertainty on efforts to avert a catastrophic debt default. House Republicans were due to meet at 10 a.m. (1400 GMT) to discuss a way forward.

Adding to investor gloom, the U.S. economy came perilously close to flat-lining in the first quarter and grew at a meager 1.3 percent annual rate in the April-June period as consumer spending barely rose. For details, see [ID:nCAT005481]

"Disappointing number, but I'm not surprised, considering the uncertainty in the market over the debt ceiling, regulations and so forth," said Matthew Keator, partner in the Keator Group, a wealth management firm in Lenox, Massachusetts.

"Structurally, corporations are doing a good job, but on the macro side, with all the uncertainty, it isn't surprising that we're seeing this type of headwind."

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Wall Street stocks opened sharply lower. The Dow Jones industrial average <.DJI> was down 113.79 points, or 0.93 percent, at 12,126.32. The Standard & Poor's 500 Index <.SPX> was down 13.43 points, or 1.03 percent, at 1,287.24. The Nasdaq Composite Index <.IXIC> was down 31.53 points, or 1.14 percent, at 2,734.72.

World equities as measured by the MSCI world equity index <.MIWD00000PUS> fell 0.8 percent. The benchmark index has fallen more than 3 percent this week, on track for its biggest weekly loss since August, 2010.

European stocks <.FTEU3> lost 1.3 percent following a string of disappointing corporate results. Emerging stocks <.MSCIEF> were down nearly 1 percent.

Even if U.S. lawmakers agree on a last-minute deal, many investors believed it would not prevent ratings agencies from downgrading the U.S. credit rating.

"We're basically standing on the edge of an abyss, peeking over, with the bottom nowhere to be seen. That's the situation facing all financial markets heading into a weekend that could prove to be one of the most crucial in history," said Ben Potter, strategist at IG Markets.

DOLLAR FALLS

The dollar plunged to all-time lows against the Swiss franc of 0.78749

Japanese Finance Minister Yoshihiko Noda warned about the strong yen, saying he would consider how long Japan could ignore current exchange rate moves without acting. [ID:nT9E7IE01O]

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

The euro

Fears of contagion arising from euro zone's debt crisis grew after rating agency Moody's placed Spain's Aa2 credit rating on review for possible downgrade. The move followed Thursday's disappointing Italian auction which saw 10-year bonds sold at the highest yield in 11 years.

"These sovereign debt problems are leading to a decent demand for safe-haven currencies like the yen and the Swiss franc," said Roberto Mialich, FX strategist at Unicredit.

Spot gold

Ten-year Treasury notes

(Additional reporting by Angela Moon, Gertrude Chavez-Dreyfuss and Frank Tang in New York, and Carolyn Cohn and Natsuko Waki in London) (Editing by Theodore d'Afflisio)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.