Wednesday, Oct 15, 2008
Signs of renewed risk aversion surfaced on Wednesday with stocks pressured and gold rising as investors fret the global economy will not escape a recession even after bank bailouts, which have taken the edge off money market stress.
Oil prices held near a one-year trough below $80 set on Friday, while the yen and government bonds climbed as fears about an imminent financial meltdown gave way to economic worries after trillions of dollars were pledged to boost the banking system.
“The panic may have been removed from the market, and financial system meltdown may have be averted by the compendium of measures, but the outlook for earnings … and the global economy continues to look grim,” said Daragh Maher, deputy Head of global FX strategy at Calyon.
Fuelling those concerns was a disappointing outlook from PepsiCo Inc, especially given that soft drink- and snack-makers are usually seen as holding up in tough economic times.
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European stocks fell in early trade, with the FTSEurofirst 300 index shedding 2 percent, while Germany’s DAX and Britain’s FTSE both shed more than 2 percent.
MSCI’s main world stock index was down about 1 percent, as the two-day rebound from a five-year low fizzled.