World Bank forecast causes markets to tumble
Copper prices fell and shares plummeted across Europe as markets reacted to the World Bank’s decision to cut its economic forecasts for this year and next.
The price of copper, regarded as a barometer of global economic demand, fell as much as 8% to a low not seen for more than five years after the World Bank said the world economy was too reliant on the US.
The bank blamed reduced prospects for growth in the eurozone, the state of finances in Japan and some big emerging economies for its decision to cut its 2015 global growth forecast to 3% from 3.4%.
Germany’s Dax index fell 0.75%, dragged down by steel producer ThyssenKrupp, which fell 3.6%. In France the CAC index dropped 0.9% as rival steel company ArcelorMittal lost 4.5%.
In London, copper miner Antofagasta fell more than 10% and was the biggest loser in the FTSE 100 index, which was down 1.3%. All the 10 worst performers in the index, including Glencore and oil producer BG Group, were commodities companies. Brent crude fell 1.7% to $45.78 a barrel.
“Europe has been pretty sluggish, China’s still got that property overhang, Japan’s entered recession. You’ve got the US and UK going fine, so it’s a patchy global growth picture – but it’s one that has definitely deteriorated from six months ago,” UBS analyst Daniel Morgan said.
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