Nusa Dua, Oct 13 (AP/UNB) — Global financial leaders wrapped up an annual meeting of the International Monetary Fund and World Bank on Saturday by urging countries to brace for potential risks from trade disputes and other tensions.
The meetings in Bali, Indonesia, this week were overshadowed by a spate of financial market turmoil and by the threat to global growth from the trade clash between the U.S. and China over Beijing's technology policies.
The International Monetary and Financial Committee, which advises the IMF's board of governors, issued a communique on Saturday urging countries to keep debt under control, engineer policies to ensure credit is available in line with their levels of inflation and ensure sustained economic growth "for the benefit of all."
IMF Managing Director Christine Lagarde said that while global growth is still strong, it has leveled off. The IMF started the meetings in Bali by downgrading its 2018 estimate for global growth to a still robust 3.7 percent from an earlier forecast of 3.9 percent.
"I think it's not inconsistent to have a plateaued growth and downside risks that are the clouds on the horizon, some of which have begun to open up," Lagard said. Adding that given the level of debt around the world, "we've given strong recommendations and in terms of trade: de-escalate and please dialogue."
Countries should seek to ensure their levels of debt are manageable and that policies foster growth for all, she said. "Sail together and we will be stronger. Focus on your policies. Don't drift and let's cooperate as much as we can because we will be better off together."
China's central bank governor, Yi Gang, joined the chorus of consternation over the trade standoff, which has resulted in Washington imposing penalty tariffs on tens of billions of dollars of imports of Chinese products and Beijing responding in kind. Protectionism and trade tensions are "major risks" for the world economy, he told fellow financial leaders.
U.S. Treasury Secretary Steven Mnuchin downplayed the level of alarm. He said he doesn't lose sleep over the possibility that China might step up its sales of U.S. treasuries in retaliation for pressure from Washington to alter national economic strategies aimed at nurturing Chinese leaders in many advanced technologies.
Mnuchin said it was still not certain if President Donald Trump would meet with his Chinese counterpart Xi Jinping at a Group of 20 summit late next month in Buenos Aires. Reports that such a meeting was likely raised hopes for progress on the impasse between the world's two largest economies, stilling disquiet on financial markets Friday.
"I don't think any decision has been made in regards to a meeting," he said, saying he favored one. "The president will decide."
It's unclear if the two sides can make enough progress before then given the limited room for maneuvering. Apart from chronic U.S. trade deficits, the policies Washington objects to are central to Beijing's strategy for guiding the economy for decades to come.
Stepping up Chinese imports of U.S. goods and commodities such as liquefied natural gas won't cut it, Mnuchin said.
It's "about structural issues," he acknowledged. "This is not about buying more soybeans and buying more LNG," he said.
"There have to be meaningful commitments to create a rebalanced trading relationship," he said.
New York, Oct 12 (AP/UNB) — U.S. stocks sank more than 2 percent Thursday, the second day of steep declines around the globe driven by concerns about rising interest rates and trade tensions that could slow economic growth.
The Dow Jones Industrial Average fell 545 points after dropping 831 points Wednesday. The two-day loss of 5.3 percent is the biggest for Dow since February. The S&P 500 is also down more than 5 percent over the two days and after falling for the past six trading days is almost 7 percent below its Sept. 20 high.
The recent turbulence in financial markets is a contrast to what investors have grown accustomed to in a bull market that has lasted more than 10 years, the longest in history. A hallmark of the past decade has been ultra-low interest rates, which the Federal Reserve used to promote growth in the aftermath of the 2008 financial crisis.
The Fed has been gradually raising interest rates over the past two years, after not having increased them since the recession. Those higher rates have been the catalyst for recent selling, stoking concerns that slower growth would impinge on corporate profits.
The selling Thursday was widespread. Energy companies sank along with oil prices and CVS lead a rout in health care stocks. Technology companies and retailers, including longtime market favorites Apple, Alphabet and Amazon, extended their recent slide.
"There isn't much of a place to hide right now in the equity market," said Willie Delwiche, an investment strategist at Baird.
Seeking safety, investors bought gold and government bonds. That pushed bond prices up and their yields down, ending a surge in yields that had touched off the market's current decline. But investors found more things to worry about.
There are ongoing concerns about the unresolved trade dispute between the U.S. and China, the world's second-biggest economy.
Strong earnings reports in the coming weeks could soothe investor nerves, but negative comments from company executives about future profits could have the opposite effect. Recently a larger-than-normal number of companies have warned that their third-quarter results could be weaker than analysts expected.
The benchmark S&P 500 index rose in morning trading, but ultimately gave up 57.31 points, or 2.1 percent, to 2,728.37, its lowest close in three months. The index has declined 6.7 percent during its current losing streak. That's its steepest downturn since a 10-percent drop in early February.
The Dow Jones Industrial Average lost 545.91 points, or 2.1 percent, to 25,052.83 after falling as much as 698. The Nasdaq composite skidded 92.99 points, or 1.3 percent, to 7,329.06. The Russell 2000 index of smaller-company stocks fell 30.03 points, or 1.9 percent, to 1,545.38.
Thursday's losses in the U.S. followed steep declines overseas. Markets in France, Britain and Germany fell after stocks declined sharply in Hong Kong and Japan.
"People are trying to get a sense of 'where should my money actually be right now?'" said JJ Kinahan, chief market strategist for TD Ameritrade.
The S&P 500's current decline is the longest since a nine-day skid shortly before the 2016 presidential election. It has climbed 27.5 percent since Donald Trump was elected and is still up 2.1 percent in 2018.
The market had been calm from late June through September as investors were satisfied with continued economic growth, strong company profits, and signs of progress in trade talks between the U.S. and several partners, even as the U.S. remained at odds with China.
But traders have grown more uneasy about the U.S.-China trade dispute, which has been escalating. Washington has imposed tariffs on tens of millions of dollars of Chinese exports and Beijing has responded with similar retaliatory taxes on imports of U.S. goods.
And there are indications that China's economy has begun to cool, prompting its government to take steps to stem the slowdown in economic growth. China's stock market is in a steep slump, with Hong Kong's Hang Seng index down more than 15 percent this year.
Delwiche, the Baird strategist, thinks the current U.S. market slump isn't over yet.
"I don't see evidence right now that this is a one-off event," he said.
On Thursday, President Trump renewed his criticism of the Federal Reserve, blaming the recent downturn in the stock market on the Fed's rate policy.
"We have interest rates going up at a clip that's much faster than certainly a lot of people, including myself, would have anticipated. I think the Fed is out of control," the president said to reporters in the Oval Office.
Trump said he had no intention of firing Jerome Powell, who he appointed as Fed chairman in February.
Bond prices rose as the recent surge in yields attracted the attention of some investors. The yield on the 10-year Treasury note fell to 3.15 percent from 3.22 percent late Wednesday. That's still sharply higher than it was about a week ago, and earlier this week the yield on the 10-year note reached its highest level since mid-2011.
The drop in yields hurt banks, and JPMorgan Chase fell 3 percent to $1078.13 while Bank of America sank 3 percent to $28.36. JPMorgan Chase and several other banks will report their third-quarter results Friday morning.
Technology and retail companies continued to stumble. Amazon dropped another 2 percent to $1,719.36 and Apple fell 0.9 percent to $214.45. Microsoft and Alphabet, Google's parent company, were little changed. Those stocks have made huge gains for years, but they're currently out of favor. Amazon and Alphabet, respectively the second- and fourth-most valuable U.S. companies, are in what's known as a "correction," a drop of more than 10 percent from a recent peak. Facebook, the sixth-largest company, has tumbled 29 percent since late July, surpassing the 20-percent threshold for a "bear market."
The Nasdaq composite has fallen 9.6 percent since it set a record high in late August and the Russell 2000 has fallen 11 percent.
U.S. crude dropped 3 percent while Brent crude, the international standard, dropped 3.4 percent. Wholesale gasoline, heating oil and natural gas also declined.
After months of declines, the price of gold jumped by the most in two years, rising 2.9 percent to $1,227.60 an ounce.
In other metals trading, silver rose 2 percent and copper added 0.8 percent.
The dollar fell to 111.94 yen from 112.59 yen, and the euro rose to $1.1594 from $1.1525.
Nusa Dua, Oct 11 (AP/UNB) — The heads of the World Bank and IMF on Thursday urged the U.S. and China to play by world trade rules and de-escalate a dispute over Beijing's technology development strategy that threatens to do lasting damage to the global economy.
Christine Lagarde, managing director of the International Monetary Fund, said she would advise Beijing and Washington to cool down, fix aspects of the world trading system that need fixing and "don't break it."
Lagarde and World Bank President Jim Yong Kim spoke separately on the sidelines of the lenders' annual meeting in a resort zone of the tropical Indonesian island of Bali. The event brings together finance ministers and central bankers from many economies, amid tight security: a line of armed personnel carriers were lined up alongside a beach path and access to the area was tightly controlled.
Asked about the escalating dispute between the U.S. and China, Lagarde said that so far there had been no "contagion" of major damage from penalty tariffs imposed by the two countries on each other's exports, but that they do risk hurting "innocent bystanders."
Lagarde said her advice was in three parts: "De-escalate. Fix the system. Don't break it."
The rules-making World Trade Organization, based in Geneva, has ways of addressing U.S. complaints that China's policies unfairly extract advanced technologies and put foreign companies at a disadvantage in its push to dominate certain industries, she said. But she added that the WTO does need to work on addressing issues like subsidies.
"Our strong recommendation is to escalate work for a world trade system that is stronger, that is fairer and is fit for the purpose," she said in opening remarks.
Lagarde also, somewhat obliquely, said policies aimed toward an excessively "dominant position" were not compatible with free and fair trade.
Earlier in the week, the IMF downgraded its global economic outlook, forecasting growth will be 3.7 percent this year rather than its earlier estimate for 3.9 percent growth. It also issued reports on government finance and financial stability that warn of the risks of disruptions to world trade.
Kim said the World Bank was working with developing countries to prepare for a further deterioration. If tariffs were imposed to their most extreme limits there would be a "clear slowdown and the impact on the developing countries would be greater," he said.
"Trade is very critical because that is what has lifted people out of extreme poverty.
"I am a globalist. That is my job. That is our only chance of ending extreme poverty. We need more trade not less trade," he said.
Kim said the bank had offered help to Indonesia for its recent earthquake and tsunami and other disasters. The people gathered in Bali for the meetings got a taste of such hazards themselves with an overnight earthquake that shook hotels in the resort area cordoned off for the event. Indonesian officials said the worst damage occurred on Java island. There was no evidence of severe damage in the area near the finance meetings.
Bali, a popular tourist destination, reflects both the positive and negative aspects of Indonesia's own rapid development over the past three decades — Lagarde praised the democratic, Muslim-majority country of 260 million for making huge progress in improving its finances and fostering strong growth.
But the byproducts of the tourist boom in largely Hindu Bali have been significant inequality and environmental damage.
The annual meetings take place at a time of growing concern over trends other than trade, such as moves to raise borrowing costs in the U.S. and some other regions to help cool growth and keep inflation in check. Rising interest rates are drawing investment flows out of emerging markets in Asia and Latin America at a time when growth in their exports is likely to slow.
Argentina and Pakistan are among countries grappling with potentially destabilizing financial woes. Concerns are growing, also, over slowing growth in China and rising debts among some developing countries resulting from projects associated with Beijing's "Belt and Road Initiative" to develop ports, roads and other infrastructure.
On Monday, Pakistan Finance Minister Asad Umar said the country would seek a bailout loan from the IMF to address its mounting balance of payments crisis.
Asked about whether such help might amount to a "bailout" for Chinese loans, Lagarde said she had not yet seen a formal request for help but thought she might receive one later in the day when meeting with Umar. Any such help would have to be completely "transparent," she added.
"In whatever work we do we need a complete understanding and complete transparency about the nature of a debt that is bearing on a country," she said.
Leaders of Southeast Asian nations were also gathering in Bali for finance-related meetings, as finance ministers of the Group of 20 industrial nations and officials from the Group of 24 developing economies. The meetings include sideline events staged by non-governmental organizations.
Singapore, Oct 11 (AP/UNB) — Asian markets were broadly lower on Thursday after Wall Street slumped on a heavy selling of technology and internet stocks.
Japan's benchmark fell by an unusually wide margin of 3.9 percent and China's main index lost 4.3 percent. Markets in Hong Kong, South Korea, Australia and Southeast Asia recorded similar declines.
Investors are wary of possible further U.S. interest rate hikes. That will raise the cost of corporate borrowing and could drag on economic growth.
The U.S. Federal Reserve recently raised short-term interest rates for the third time this year, with one more expected before the year ends. Strong economic data and a positive outlook from Fed officials have led to a sell-off in U.S. Treasury bonds, particularly longer-term ones, sparking concerns about even higher interest rates.
On Wednesday, President Donald Trump said the Fed "is making a mistake" with its campaign of rate increases. "I think the Fed has gone crazy," he charged.
Stephen Innes of OANDA said that Trump's comments have put pressure on the dollar but "the severity of this equity rout could bring the hawkish Fed narrative into question."
"If the Feds are crazy, this market reaction is bordering on insanity, as so many negative crosscurrents collide that is merely impossible to find a glint of optimism," he added.
Sentiment also has been dampened by the spreading U.S.-Chinese tariff fight over Beijing's technology policy. The International Monetary Fund cut its outlook for global growth this week, citing interest rates and trade tensions.
Tokyo's Nikkei 225 gave up 3.9 percent to 22,591.10 and the Shanghai Composite lost 4.3 percent to 2,607.44. The Kospi in South Korea fell 3.6 percent to 2,148.97. Australia's S&P/ASX 200 slipped 2.4 percent to 5,906.00. Stocks plunged in Taiwan and fell across Southeast Asia.
U.S. stocks slumped on Wednesday as concerns over rising interest rates and trade tensions caused a sell-off in technology and internet stocks. The Dow Jones Industrial Average suffered its worst loss in eight months, falling 3.1 percent to 25,598.74.
The S&P 500 index sank 3.3 percent to 2,785.68. The Nasdaq composite, which has a large contingent of technology stocks, was 4.1 percent lower at 7,422.05. It has fallen 7.5 percent in just five days. The Russell 2000 index of smaller-company stocks shed 2.9 percent, to 1,575.41.
Apple and Amazon, the two most valuable companies in the S&P 500, each had their worst day in 2½ years. Apple slipped by 4.6 percent while Amazon lost 6.2 percent.
Amazon has soared 50 percent this year, but its stock has fallen 14 percent from its all-time high in early September.
Francis Tan, an investment strategist at UOB private bank, believes the markets will likely pick up in the U.S. session. "The valuation of U.S. stocks, especially tech stocks, is still pretty high and there could be some profit taking actions now," Tan explained.
The dollar slipped to 112.17 Japanese yen from 112.27 yen late Wednesday. The euro rose to $1.1566 from $1.1523.
Oil futures fell. U.S. crude gave up $1.27 to $71.90 a barrel. The contract settled at $73.17 in New York. Brent crude, the international standard, dropped $1.58 to $81.51 a barrel.
New York, Oct 10 (AP/UNB) — Stocks ended an up-and-down day mostly lower as losses in materials and industrial companies offset gains elsewhere in the market.
Basic materials companies fell Tuesday on worries that higher costs and weakening demand are eroding profits. Paint maker PPG Industries dropped 10.1 percent.
Energy stocks climbed with the price of oil, and technology stocks recovered some of the sharp losses caused by last week's rapid rise in interest rates.
The S&P 500 index fell 4 points, or 0.1 percent, to 2,880.
The Dow Jones Industrial Average lost 56 points, or 0.2 percent, to 26,430. The Nasdaq composite rose 2 points to 7,738.
Bond prices rose. The yield on the 10-year Treasury note fell to 3.20 percent.
Stock indexes are mostly higher as technology companies and other sectors recovered some of the sharp losses caused by last week's rapid rise in interest rates.
Microsoft climbed 1.7 percent in midday trading Tuesday and Apple rose 1.2 percent.
Raw-material producers sank on worries that higher costs and weakening demand are eroding profits. PPG Industries slumped 8.6 percent.
Papa John's surged 8.4 percent after the Wall Street Journal reported that activist investor Nelson Peltz was evaluating a bid for the company.
The S&P 500 rose 6 points, or 0.2 percent, to 2,891.
The Dow Jones Industrial Average rose 20 points, or 0.1 percent, to 26,507. The Nasdaq composite rose 44 points, or 0.6 percent, to 7,780.
Bond prices rose. The yield on the 10-year Treasury note fell to 3.21 percent.
Stocks are opening slightly lower on Wall Street as banks and materials companies move lower.
Paint and coatings maker PPG Industries sank 8.6 percent in early trading Tuesday after warning that higher costs and weaker demand from China would hurt its profits.
Banks were also lower. JPMorgan Chase slipped 1 percent.
Papa John's surged 8.2 percent after the Wall Street Journal reported that activist investor Nelson Peltz was trying to put together a bid for the company.
The S&P 500 fell 5 points, or 0.2 percent, to 2,879.
The Dow Jones Industrial Average lost 55 points, or 0.2 percent, to 26,441. The Nasdaq composite was little changed at 7,740.
The yield on the 10-year Treasury note held steady at 3.22 percent.