Pick a stock market anywhere in the world, and chances are it was in negative territory Thursday. That's because economic data and corporate news from all corners painted a similar picture — the global economy is struggling.
A few of the factors that had investors heading for the exits:
- Wall Street investment bank Morgan Stanley cut its global growth forecasts for 2011 and 2012 and said the U.S. and the euro zone are "dangerously close to a recession."
- In the U.S., the Philadelphia Fed's closely watched regional manufacturing activity index fell by the most in two years to a reading of negative 30.7 in August. Any reading below 50 means there's contraction, suggesting the key sector is shrinking quickly.
- U.S. consumer prices rose 0.5 per cent in July, yet another factor that will tie the hands of the Fed as they try to stimulate the world's largest economy out of its doldrums.
- The number of Americans filing for government jobless benefits increased by 9,000 to a seasonally adjusted 408,000, its highest level in four weeks. Economists says anything above 400,000 suggests the job market is effectively not growing.
- The hard-hit U.S. housing sector got yet another piece of bad news, as data showed existing home sales dropped 3.5 per cent. in July, hitting a 2011 low.
- The Wall Street Journal reported that U.S. regulators were increasing their scrutiny of Europe’s biggest banks, fearful of another collapse.
- The New York Times said U.S. officials are probing ratings agency S&P for being asleep at the switch when they handed out pristine AAA ratings to suspect mortgage securities before the 2008 crash.
- European banks were also undermined by a proposed tax on financial transactions put forward by German Chancellor Angela Merkel and French President Nicolas Sarkozy on Tuesday.