The MSCI All-Country World Index lost 1 percent at 9:32 a.m. in New York, as the Standard & Poor’s 500 Index fell 0.3 percent after its biggest loss since April 10 yesterday. The Stoxx Europe 600 Index retreated 1.2 percent, heading for its worst weekly drop since June 2013. The dollar appreciated against most of its major peers. Crude oil retreated to its lowest price since July 2012, while copper led industrial metals lower. The ruble depreciated further.
Global equities have lost $3.5 trillion in value since reaching a record last month. European Central Bank President Mario Draghi clashed with Germany’s finance minister yesterday over the steps needed to revive growth in the euro area, while Federal Reserve officials have said the U.S. economy may be at risk from a global slowdown. Pro-democracy leaders in Hong Kong called on supporters to flood the city’s streets today after the government scrapped talks with protesters.
“Risks to global growth are at the center of all concerns right now,” Alessandro Bee, a strategist at Bank J Safra Sarasin AG, said by phone from Zurich. “Investors are paying more attention to what is going on outside America, because if a slowdown in the global economy drags the U.S. economy down, that really does not bode well for equities. Greater volatility this week shows the market is nervous.”
The MSCI All-Country World Index is down 1.8 percent this week, heading for a third consecutive drop, the longest streak since August 2013. All 10 industry groups in the gauge dropped today, with materials companies sliding the most.
The S&P 500 slumped 2.1 percent yesterday, erasing its biggest rally in a year. It’s on pace for a 2 percent weekly drop, a third straight decline, which would be the longest run since January. The S&P 500 is down 4.1 percent from a record on Sept. 18, trimming its gain for the year to 4.3 percent. The yearly advance for the Dow has dwindled to less than 1 percent.
Declines this week have been biggest in small-cap and transportation shares. The Russell 2000 Index is down 3.3 percent this week, extending its retreat from a March high to 12 percent. The Dow Jones Transportation Average has plunged 5.1 percent since Oct. 3, for its worse week in two years.
The Chicago Board Options Exchange Volatility Index jumped 24 percent to 18.76 yesterday, its highest level since Feb. 5. The S&P 500 has posted five days of moves exceeding 1 percent so far in October, after going without such a move for 62 days through July 16. That was the longest stretch of market calm since 1995.
Investors are also watching earnings reports after Alcoa Inc. unofficially kicked off the results season this week. JPMorgan Chase & Co., Citigroup Inc., BlackRock Inc. and Google Inc. are among S&P 500 members posting results next week. Profit for S&P 500 probably rose 4.9 percent and sales gained 4.1 percent in the third quarter, analysts projected.
The Stoxx 600 fell 3.6 percent this week. The volume of shares changing hands today was 45 percent greater than the 30- day average, according to data compiled by Bloomberg.
Portugal’s PSI 20 Index tumbled 1.3 percent. France’s CAC 40 Index is down 11 percent from its June high, and Germany’s DAX Index has lost 12 percent since its record in July.
The International Monetary Fund cut its forecast for global growth this week and said the euro area faces the risk of a recession. Draghi pledged at the IMF’s annual meeting to loosen monetary policy more if needed and called on those governments with the room to ease fiscal policy to do so. That contrasted with German Finance Minister Wolfgang Schaeuble, who warned against U.S.-style quantitative easing and urged continued budgetary discipline.
The Bloomberg Dollar Spot Index, which measures the greenback against 10 U.S. trading partners, added 0.3 percent today, up for a second day. It’s still poised for its first weekly decline since August after reaching a four-year high.
Yields on 10-year Treasuries dropped less than 1 basis point to 2.31 percent today after reaching the lowest level in more than 15 months yesterday. Philadelphia Fed Bank President Charles Plosser will speak today, as will his colleagues Esther George, Richard Fisher and Jeffrey Lacker.
West Texas Intermediate oil slid as much as 2.5 percent to $83.59 a barrel in New York. The commodity fell into a bear market yesterday amid speculation that rising global oil supplies will be more than enough to meet slowing demand. Brent crude oil for November settlement decreased to as little as $88.11 a barrel on the London-based ICE Futures Europe exchange, the lowest price since December 2010. The European benchmark crude entered a bear market on Oct. 8.
Copper dropped 1.2 percent to $6,697 a metric ton. Aluminum, zinc and nickel also fell. Platinum lost 1.3 percent to $1,258.38 an ounce. Silver slipped 0.7 percent and gold dropped 0.2 percent.
The MSCI Emerging Markets Index slid 1.4 percent, heading for a fifth weekly drop. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong decreased the most in a month, reversing its advance in the five-day period. The Shanghai Composite Index slipped 0.6 percent.
The IMF lowered its forecasts for economic growth in emerging Asia to 6.5 percent this year and 6.6 percent next. Those are down from April estimates of 6.7 percent for 2014 and 6.8 percent for 2015.
Russia’s Micex Index declined 1.1 percent, heading for a second weekly drop. The ruble depreciated 0.8 percent, extending its slump in the past three months to 17 percent, the worst performance among currencies tracked by Bloomberg worldwide.
The central bank has spent more than $3 billion to slow the currency’s selloff amid a dollar shortage and slump in oil prices. U.S. and European sanctions have made it harder for companies to refinance the nearly $55 billion of debt the central bank estimates is due through December.
The Borsa Istanbul 100 Index dropped 1.6 percent today, taking it down 0.5 percent in a shortened, three-day week. The lira slid 0.5 percent. Turkey’s main city in the country’s southeast has been under curfew for two nights, while violence flared in the region amid Kurdish protests in what they say is the government’s failure to help Kobani, a largely Kurdish town across the border in Syria that’s under siege by Islamic State militants.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.