Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Pre-Market Primer: US Follows Global Sell-Off as World Bank Cuts Growth Forecast


But good retail sales and jobless claims numbers might help.

Futures followed a global rout after the World Bank lowered its world economic outlook on concerns over central banks pulling back on easing.

The World Bank said that the global economy will expand by 2.2%, down from previous forecasts of 2.4%.

"While there are markers of hope in the financial sector, the slowdown in the real economy is turning out to be unusually protracted," said World Bank Chief Economist Kaushik Basu. "This is reflected in the stubbornly high unemployment in industrialized nations, with unemployment in the eurozone actually rising."

The Bank also pointed to slower growth in China and India as well as the eurozone recession as reasons for the cut, but warned that austerity programs and the eventual end of loose monetary policy could throw off growth. Europe is expected to shrink by 0.6% and the forecast for China was lowered to 7.7% from 8.4%. Global growth in 2014 is likely to rise to 3%, the Bank said.

This was a catalyst for a sell-off in Asia. Every single component of the Nikkei (INDEXNIKKEI:.NI225) fell today, and the index fell 6.35%. The yen fell 2% on the dollar to 94.16, the strongest the yen has been in two months. European stocks also declined. Germany's DAX (INDEXDB:DAX) fell 1.41%.

Greece's unemployment rate rose to a fresh high of 27.4% for the first quarter.

US stocks are set to follow global shares downward. After yesterday's slump, Dow (INDEXDJX:.DJI) futures were down 0.23% at 14,944 this morning before the opening bell. S&P 500 (INDEXSP:.INX) futures also fell 0.30% to 1,605.10 and contracts on the Nasdaq (INDEXNASDAQ:.IXIC) index sank 0.29% to 2,911.75.

The sell-off might be tempered by some better-than-expected US economic data. Initial claims for unemployment insurance fell by 12,000 to 334,000. Economists predicted that claims would rise to 350,000. Retail sales also improved more than forecast. In May, sales increased 0.6% over April, beating expectations by a tenth of a point. Import and export prices fell in May, however. Imports fell 0.6% and exports fell 0.5% where experts predicted they would be relatively flat.

In corporate news, International Business Machines Corp. (NYSE:IBM) said that it has earmarked $1 billion for severance costs as it prepares to lay off thousands of employees.

Safeway Inc. (NYSE:SWY) shares surged 22% on news that it will sell its Canadian stores for C$5.8 billion. It will use $2 billion for stock buybacks.

After falling almost 11% yesterday, First Solar, Inc. (NASDAQ:FSLR) shares fell another 3% this morning on news of its coming stock offering.

Twitter: @vincent_trivett
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Featured Videos