As uncertainty permeates global markets, stock prices decline

World stocks slipped on Friday as investors faced uncertainty across major economies and a global outage affecting services from airlines, banks, and financial institutions added to the week's market turbulence.

A tech sell-off, driven by escalating Sino-U.S. trade tensions, uncertainty surrounding U.S. President Joe Biden's re-election prospects, disappointing economic data from China, and an uninspiring third plenum outcome, has overshadowed global sentiment. Additionally, recent yen interventions by Tokyo have kept currency traders cautious.

European shares fell, with London stocks dropping 0.4%, and MSCI’s index of Asia-Pacific shares outside Japan declining by 1.7%, heading for its worst week in three months with nearly a 3% loss. Technology stocks in Asia also struggled, with South Korea’s KOSPI index and Taiwan stocks falling by 1% and 2.26%, respectively.

U.S. stock futures indicated a weaker open later in the day. Major U.S. airlines reported grounding flights due to communication issues, while other sectors, including media companies, banks, and telecoms, experienced system outages that disrupted operations. LSEG Group's Workspace news and data platform also faced a global outage affecting financial markets.

Ben Laidler, head of equity strategy at Bradesco BBI, commented, "Investors are already on edge due to the tech rotation, and this global outage adds another layer of uncertainty."

European stocks decreased by 0.5%, with MSCI's index of Asia-Pacific shares outside Japan on track for its worst week in three months. Technology stocks in Asia struggled, with South Korea’s KOSPI index and Taiwan stocks falling by 1% and 2.26%, respectively.

Michael Metcalfe, head of global macro strategy at State Street Global Markets, noted that political factors, interest rate expectations, and corporate earnings significantly impacted global markets. The potential for a Trump presidency and its implications for markets, including views on the dollar and tech regulation, have created notable market shifts this week.

Investors are also focused on the Federal Reserve's response to improving inflation data and the ongoing U.S. earnings season. "Tech has been the primary driver of earnings growth in recent years, making it crucial for overall risk sentiment," Metcalfe said.

In China, disappointment lingered over the lack of specific details on implementing economic policy goals from the recent plenum. Chinese officials admitted the economic goals contained "many complex contradictions," suggesting a challenging path ahead for policy execution. While Chinese blue-chips rose by 0.5%, the CSI300 Real Estate index fell by about 2%, reflecting ongoing issues in the property sector.

The euro dropped nearly 0.2% to $1.0878 after the European Central Bank (ECB) held rates steady but hinted at a possible cut in September due to a downgraded economic outlook for the eurozone. Nick Rees, FX market analyst at MonFX, noted, "The policy statement provided little new information, maintaining a data-dependent approach to policy setting. We still anticipate a September cut."

The dollar strengthened, moving away from a four-month low against a basket of currencies. Sterling declined 0.2% to $1.2918 following weaker-than-expected British retail sales data for June, while the dollar remained steady around 157.29 yen.

In commodities, oil prices remained relatively stable, with Brent crude futures at approximately $85.20 per barrel and U.S. crude futures flat at around $82.78 per barrel. Gold eased by 0.6%, retreating from a record high of $2,483.60 per ounce earlier in the week, influenced by expectations of lower global interest rates.

Paraphrasing text from "Reuters" all rights reserved by the original author.