Stocks fall on fears of US weakness
Published: Bangkok Post 26/10/2012 at 05:53 PM Online news: News http://www.bangkokpost.com/business/new ... s-weakness
Stocks declined and commodities dropped to three-month lows as big companies worldwide continued to post poor results amid concern that US economic growth is stalling again.
The US Commerce Department announced that third-quarter gross domestic product expanded by 2.0% from a year ago, better than forecasts for 1.8% growth and up from 1.3% in the second quarter. However, economists believe the fourth quarter will be weaker.
As well, some investors are already moving to the sidelines until they see the outcome of the US election on Nov 6.
Poor results from Amazon and Apple, two belwethers of US consumer spending, also have disappointed investors.
Investors walk past a trading display at a brokerage in Bangkok, where the SET Index fell 1.2% on Friday. (AFP photo)
SET president Charamporn Jotikasthira said the equity market remained highly volatile as the global economic slowdown still has no definitive solution.
Kongkiat Opaswongkarn, the CEO of Asia Plus Securities, said investment in the stock market would likely slow down ahead of the US election.
If Republican Mitt Romney is elected, he said, investors might be concerned about US policy changes. Mr Romney vows to create new jobs for Americans and might take a harder line on China to do so. A decline in China-US trade would hurt other countries in Asia.
Foreign investors have been net sellers of Thai shares for most of the week, including 1.14 billion baht on Friday, as they expect US third-quarter economic performance to be weak, which would affect equities worldwide.
"Investors have priced in the real fundamentals of companies in the US market, and the good sentiment brought about by [the Federal Reserve's] QE3 will depart if it cannot help the economy recover," Mr Sukit said.
Meanwhile, financial results from some of the world's biggest companies remain disappointing.
Ericsson, the world's largest maker of mobile-phone networks, posted a 43% decline in third-quarter profit. Amazon, the biggest online retailer, had its first quarterly net loss since 2003.
Oil prices fell 0.7% to $85.43 a barrel for benchmark West Texas Intermediate crude in New York, further reflecting economic weakness.
World markets fell ahead of the release of the US GDP data. Britain's FTSE 100 fell 0.5% to 5,774.36 in early trade on Friday. Germany's DAX lost 0.5% to 7,163.75. France's CAC-40 shed 0.7% to 3,388.73.
Wall Street was also headed for a fall. Dow Jones industrial futures fell 0.8% to 12,955 and S&P 500 futures lost 0.7% to 1,397.50.
Asian stocks posted losses earlier in the day after data on US housing dimmed hopes of improvement in an industry that is crucial to the country's recovery.
Japan's Nikkei 225 index slid 1.4% to close at 8,933.06. South Korea's Kospi tumbled 1.7% to 1,891.43. Hong Kong's Hang Seng shed 1.2% to 21,545.57. Australia's S&P/ASX 200 lost 0.8% to 4,472.40. The Shanghai Composite Index sank 1.7% to 2,066.21 and the Shenzhen Composite Index shed 2% to 840.51.
The Bank of Thailand has cut its growth forecast for next year as a weakening global economy depresses exports and hampers a recovery from last year's floods.
The central bank lowered its estimate for GDP growth for 2013 to 4.6% from 5%, while maintaining its prediction for this year at 5.7%.