Markets muted on 5-year credit crunch anniversary

Markets lackluster despite Chinese stimulus hopes on 5-year anniversary of credit crisis start

Associated Press
Asia stocks stall amid global economic woes
.

View photo

Currency traders work at the foreign exchange dealing room of the Korea Exchange Bank headquarters in Seoul, South Korea, Monday, Aug. 6, 2012. The Korea Composite Stock Price Index rose 2.01 percent, or 37.20, to close at 1,885.88. (AP Photo/Ahn Young-joon)

LONDON (AP) -- Financial markets were lackluster on Thursday — what many consider the fifth anniversary of the start of the global credit crisis — despite positive U.S. jobs figures and hopes that China's monetary authorities will do more to shore up economic growth in the world's second largest economy.

After a run of positive days, investors were reluctant to keep buying riskier assets, such as stocks and the euro, despite a run of Chinese economic indicators that cemented expectations Beijing will ease monetary policy to boost growth.

With inflation in China falling to 1.8 percent in July from the previous month's 2.2 percent, analysts say the country's authorities have room to maneuver. Separate figures on industrial production and retail sales confirmed the slowdown.

"Normally, the prospect of stimulus in China gets investors fairly excited, but today the reaction has been more muted," said Chris Beauchamp, market analyst at IG Index.

In Europe, Germany's DAX was down 0.02 percent at 6,964 while the CAC-40 in France rose 0.5 percent to 3,456. The FTSE 100 index of leading British shares was 0.03 percent higher at 5,844.

In the U.S., a 6,000 decline in weekly jobless claims gave stocks a little push at the start of trading in New York, but soon lost its impact — the Dow Jones industrial average was down 0.15 percent at 13,100 while the broader S&P 500 index was off 0.2 percent to 1,399.

The unremarkable performance in stock markets contrasts with what occurred five years ago, when French bank BNP Paribas closed two funds exposed to U.S. subprime mortgages, alarming global banks, who quickly stopped lending to each other. The credit freeze became so bad that day that the European Central Bank pumped €95 billion into financial markets to free up the flow of capital between banks.

That failed to calm markets, as did the raft of liquidity injections and interest rate cuts in the following months. A year later, the credit crunch eventually led to the collapse of Lehman Brothers that triggered the deepest global recession since World War II.

"It's hard to believe that it's five years ago today that the financial world started to appreciate the magnitude of the problems that would be the soundtrack to our lives over the last five years," said Jim Reid, an analyst at Deutsche Bank.

The period has proved to be one of the most dramatic and volatile periods for financial markets since the stock market crash of 1929. Most stock indexes are still far below the peaks they hit in the summer of 2007.

By contrast, returns on so-called safe haven investments — such as government bonds from the U.S., Germany and Britain, as well as precious metals like gold — have been strong as investors sought to protect their capital.

The effects of that crisis are still being felt far and wide, with the world's largest economies facing differing degrees of financial trouble. In Europe, the debt crisis shows few signs of abating despite hopes that the European Central Bank is readying a new strategy to lower the borrowing rates of Spain and Italy. Policymakers in the U.S. and China are grappling with how to kickstart growth, albeit at sharply different levels.

Hopes that the ECB will play a more active role in fighting Europe's debt crisis have shored up markets for the best part of two weeks. Stocks have enjoyed one of their best runs in months, while the euro has clambered off near two-year lows against the dollar and oil prices have pushed back above the $90 a barrel mark. On Thursday, the euro was trading 0.5 percent lower at $1.23.

Unemployment figures out of Greece highlighted the human cost of the financial crisis — 23.1 percent of the working population were without a job in May. A startling 53.9 percent of under 25s were unemployed. Even worse figures are expected in the coming months as Greece remains mired in a five-year recession and the government contemplates another round of big spending cuts to meet demands of international creditors.

Earlier in Asia, Japan's Nikkei 225 rose 1.1 percent to close at 8.978.60. During the session, the Nikkei had surpassed the 9,000 level for the first time since July 6.

South Korea's Kospi jumped 2 percent to 1,940.59. Hong Kong's Hang Seng added 1 percent to 20,269.47. On the Chinese mainland, the Shanghai Composite Index rose 0.6 percent to 2,174.10. The smaller Shenzhen Composite Index added 1.5 percent to 909.69.

Oil prices advanced further, with the benchmark rate up 41 cents at $93.76 a barrel.

Rates

View Comments (0)

Recommended for You

  • Tycoon buys 30 Rolls-Royces for Macau hotel

    A Hong Kong tycoon has placed the biggest ever order for Rolls-Royce cars, agreeing to buy 30 Phantoms to chauffeur guests at a luxury resort he's building in the global gambling capital of Macau. Stephen Hung's $20 million purchase surpasses the 14 Phantoms bought by Hong Kong's Peninsula Hotel in…

    Associated Press
  • Enjoy this refreshing Triple Play offer!

    Get FIOS TV Mundo starting at $79.99/mo. w/ no annual contract + 2-yr. price guarantee. Or sign for 2 yrs. & get a $300 prepaid Visa. Click here.

    AdChoicesVerizon FiOS ®Sponsored
  • Tycoon's arrest sends shock wave through Russia

    Tycoon's arrest sends shock wave through Russia MOSCOW (AP) — The arrest of a Russian telecoms and oil tycoon has sent shock waves through the country's business community, with some fearing a return to the dark days of a decade ago, when the Kremlin asserted its power by imprisoning the country's…

    Associated Press
  • Before You Buy Alibaba, Check Out 4 Top China Stocks

    Before You Buy Alibaba, Check Out 4 Top China Stocks While investors gear up for Alibaba Group 's (BABA) hotly anticipated initial public offering, don't forget about other Chinese stocks that are worth keeping an eye on. Today's Young Guns Screen of

    Investor's Business Daily
  • As Fed takes baby steps, Cramer's trick for profit

    In turn, Cramer says making money in the market, involves looking at the environment through the lens of the Fed. "The trick is to remember that they speak for the common person," Cramer said. "The Fed wants the common person to make money." With that backdrop always in mind, Cramer says it becomes…

    CNBC
  • Costco Stores in Canada to Stop Taking American Express

    “The credit card relationship between American Express and Costco Wholesale Canada will not be renewed when it expires” on Dec. 31, the company said today in an e-mail to Canadian customers. The message was attributed to Lorelle Gilpin, vice president of marketing and membership for Costco…

    Bloomberg
  • "The Retiree Next Door": How successful retirees stretch their savings

    "The Retiree Next Door": How successful retirees stretch their savingsBy the time she hit her late 40s, Toni Eugenia wasn’t sure she would ever be able to retire. Eugenia, 56, a pharmacy technician who lived in Houston, was nearly $200,000 in debt and

    Yahoo Finance
  • CNBC Anchor Calls Out Fed-Hater Bill Fleckenstein In Startling Shouting Match

    CNBC Bill Fleckenstein of Fleckenstein Capital appeared on CNBC's Futures Now program on Tuesday. Futures Now host Jackie DeAngelis came out swinging, asking Fleckenstein right at the top if he was willing to admit that he had misunderstood monetary policy. Sounding taken aback, Fleckenstein…

    Business Insider
  • Chase Credit Cards

    Choose from cards with travel rewards, cash back, low interest, and more. Learn More.

    AdChoicesCreditcards.chase.comSponsored
  • Play

    Citi, Bank of America Offer Discounted Mortgages

    Citigroup and Bank of America will offer mortgages at discounted interest rates to help borrowers with low incomes or subprime credit. AnnaMaria Andriotis joins MoneyBeat. Photo: Getty.

    WSJ Live
  • Beanie Babies creator's sentence debated in court

    Beanie Babies creator's sentence debated in court CHICAGO (AP) — Federal prosecutors seeking to put the billionaire creator of Beanie Babies in prison for hiding millions in Swiss bank accounts told appellate court judges Wednesday that the toymaker's sentence of probation threatens to erode the…

    Associated Press
  • Apple to unveil new iPads, operating system on Oct. 21 : report

    The company plans to unveil the sixth generation of its iPad and the third edition of the iPad mini, as well as its operating system OS X Yosemite, which has undergone a complete visual overhaul, the Internet news website said. Trudy Muller, a spokeswoman for Apple, declined to comment. The iPad is…

    Reuters
  • Margaritaville casino owners seek bankruptcy

    The owner of Biloxi's Margaritaville casino has filed for Chapter 11 bankruptcy protection Tuesday, only hours before a hearing where the landlord aimed to seize the property. The filing by MVB Holding LLC in U.S. Don Dornan, a lawyer for landlord Clay Point LLC, said the company had planned to ask…

    Associated Press
  • Embraer to sell 50 E-175 jets to Republic in $2.1 billion deal

    Brazil's Embraer SA, the world's third largest commercial planemaker, said on Wednesday it booked a firm order from U.S. The deal, which will be included in Embraer's order book for the third quarter, is valued at $2.1 billion, the planemaker said in a securities filing. The planes will be operated…

    Reuters
  • Gilead Stock Is Falling On These Drug Setbacks

    Gilead Stock Is Falling On These Drug Setbacks Gilead Sciences (GILD) shares are backsliding Wednesday on news that the patient drop-out rate for hepatitis C drug Sovaldi is quadruple that of clinical trials. In addition, the biotech's Phase 2 study results

    Investor's Business Daily
  • AARP® Auto Insurance Program from The Hartford

    50+? Request a free quote and you could save $404* on Auto Insurance from The Hartford!

    AdChoicesThe HartfordSponsored
  • Here's What Mark Cuban Wishes He Knew About Money In His 20s

    Cuban is the owner of the Dallas Mavericks basketball team. Billionaire investor and entrepreneur Mark Cuban is generous with his advice. When we asked him what he wishes he'd known about money in his 20s, he said:

    Business Insider
  • Play

    What the Fed Meeting Means for Bonds

    Janet Yellen & Co. are expected to hint at their timetable for raising interest rates. Here's how investors should prepare ahead of the meeting.

    WSJ Live
  • Don't buy Alibaba stock: 'Dean of Valuation'

    Investors should steer clear of Alibaba , valuation expert Aswath Damodaran said Wednesday. On CNBC's " Fast Money ," Damodaran, a professor of finance at New York University's Stern School of Business, noted that he was looking at Alibaba stock from the perspective of a long-term investor, not a…

    CNBC
  • SHOE COMPANY: Our CEO Just Disappeared And Most Of The Money Is Gone

    "and like that: he's gone." This is an actual headline from a company press release: "CEO and COO disappeared, most of the company's cash missing." (Via FastFT) In a statement, German-based shoe company Ultrasonic said its CFO,  Chi Kwong Clifford Chan, has been unable to reach the company's CEO,…

    Business Insider
  • 10 rock-solid stocks for conservative investors

    10 rock-solid stocks for conservative investors Shares with low volatility can beat their indexes with less risk Bloomberg News/Landov U.S. Bancorp is the cheapest S&P 500 stock

    MarketWatch
  • Billionaire Investor Says Chinese People Work Harder And Western Companies Could Face Deep Trouble After Alibaba IPO

    Michael Moritz, the chairman of VC firm Sequoia Capital, is a huge fan of Chinese internet companies and reiterated his enthusiasm for the Chinese market in an interview with The Wall Street Journal Wednesday. The billionaire investor described the Alibaba IPO as a “major landmark event” that is as…

    Business Insider
  • Find the Right Tire on the Michelin® Official Site

    Browse High-Quality Michelin Tires. Find Local Dealers. View Tire Specifications & Pricing. Learn about the Michelin Promise Plan® Warranty.

    AdChoicesMichelinSponsored
  • Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More

    Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More Stocks were firm on Wednesday morning ahead of the FOMC meeting outcome. Tuesday’s rally may have sparked higher interest again, and investors are looking for bargains

    24/7 Wall St.