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October 22nd, 2014, 8:11 am | By trader | Published in LUNCH IS FOR WIMPS | Comments on this postComments Off

Global shares have been on the falling end as growing concerns regarding weak economic global economic growth beat investor confidence.

In the U.S., the Dow Jones plunged by 2.5 %, before gaining back to 16,141.74, a 1 % drop as evidenced by European markets performing apparently lower.

The Dow is now down more than 1,000 points totaling 6 % from the previous month. Oil prices likewise continued to slide, with Brent crude falling to $83.78 per barrel and the U.S. light crude cascading to $81.78 correspondingly.

Brent crude fell by 20 %since the summer regarding concerns of oversupply, as output increases and forecasts for future demand fell due to concerns regarding sluggish global growth.

On the stock markets, the primary Cac 40 index in France was able to close down 3.6 %, whilst the U.K.’s FTSE 100 and Germany’s Dax index correspondingly ended the day with 2.8 %.

On other news, government bond prices were able to rise on a high note as investors sold equities along with the prospective search for relative safety of fixed-income investments.

Long-term U.S. Treasury prices were able to leap to a two-year high as yields fell sharply while bond yields fell when prices rose which is indicative of an increasing demand for the said instruments.

It basically takes several weeks for a 10-year Treasury to move 29 basis points which reportedly moved 25 basis points last week in less than five minutes during the most recent trade.

The recent economic figures were able heightened fears that the global economic recovery might be running out of steam according to recent performance based surveys.
Last week, Germany cutback its growth estimates for this year whilst the IMF similarly did the same with its forecasts for global economic growth which warned the market that the recovery was relatively frail and uneven.

Figures that were released earlier last week showed inflation falling to five-year lows in China, India and the U.K. signaling some commentators to sit down and talk about the possibility of deflation.

U.S. retail sales fell inadequately by a worse-than-expected 0.3 % in September. The Commerce Department reported having prices as low as 0.1 % on the first drop in more than a year according to reports from the labour Department.

The incoming economic data is compelling many investors to caution their apprehensions in the belief that central bankers can change the economic dynamic with a much better transparent monetary policy. Moreover, macroeconomic weakness and the apparent inability of monetary policy to thwart the problem has resulted in a market-selling trance which diminished the economic growth of the market.

Central banks have been keeping a firm hold on interest rates by limiting the borrowing costs within minimum levels in order to stimulate spending and general economic growth some of which included those in the U.S. and the U.K. in which both having bought assets with newly created money in a more unconventional bid to bolster lending and growth in a larger scale.

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