Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Asia, Europe stocks sell off

By Ben Rooney, staff reporter


NEW YORK (CNNMoney) -- Asian markets fell sharply and stocks in Europe were also under pressure Thursday, following China's surprise trade deficit and another downgrade of Spain's credit rating.

In the United States, stock futures were lower as investors remain nervous about the uncertain outlook for oil prices and the ongoing political crisis in Libya.

"Investors are very risk averse," David Jones, chief market strategist at IG Markets in London, adding that trading has been "directionless" recently.

European markets fell on renewed worries that the debt problems facing Spain, Greece and other fiscally troubled members of the European Union.

Moody's cut Spain's government bond rating to Aa2 with a negative outlook from Aa1, and said further downgrades are possible.

The Spanish government has underestimated the cost of restructuring the nation's banking system, Moody's said, suggesting it could have to borrow more. In addition, the ratings agency cast doubt on the government's ability to deal with long-term fiscal problems, as economic growth in Europe is expected to remain sluggish.

The move came after Moody's slashed Greece's credit rating three notches on Tuesday, citing the country's "very large debt burden" and challenges to its fiscal reform plan.

"It's not as if anything has changed in the last week with the Greek and Spanish economies," said Jones. "But on top of the market being generally nervous because of Libya, investors are very risk averse."

Meanwhile, stocks in Asia fell more than 1% after China reported a surprise $7.3 billion trade deficit, as imports outpaced exports in February for the first time in nearly a year.

The move surprised economists, who had expected China to report a trade surplus in February, albeit a smaller one. The monthly deficit was the country's first since March 2010.

However, government officials and analysts attributed the cooling exports to Chinese New Year, when the country's manufacturing output slowed dramatically.

"We are not overly concerned by the February data, as we believe the underlying export trend remains healthy," analysts at Nomura Securities wrote in a research report.

The deficit was largely due to "seasonal factors," the report said, adding that foreign demand for Chinese goods "seems to be on a stronger footing."

"With seasonal factors gradually abating, we expect export growth to return to more normal levels in the coming months," according to Nomura.

In morning European trading, Britain's FTSE 100 edged lower 1%, the DAX in Germany fell 0.7% and France's CAC 40 declined 0.6%.

Asian markets ended the session sharply lower. The Shanghai Composite fell 1.5%, the Hang Seng in Hong Kong slid 0.8% and Japan's Nikkei tumbled 1.4%. To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.64%3.69%
15 yr fixed2.76%2.82%
5/1 ARM3.07%3.06%
30 yr refi3.62%3.72%
15 yr refi2.78%2.84%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 15,914.74 -99.64 -0.62%
Nasdaq 4,283.59 14.83 0.35%
S&P 500 1,851.86 -0.35 -0.02%
Treasuries 1.70 -0.02 -1.39%
Data as of 8:25pm ET
Company Price Change % Change
Bank of America Corp... 11.98 -0.22 -1.80%
Facebook Inc 101.00 1.46 1.47%
Pfizer Inc 29.49 0.39 1.34%
Apple Inc 94.27 -0.72 -0.76%
Microsoft Corp 49.71 0.43 0.87%
Data as of 4:15pm ET

Sections

Average U.S. household will save $320 on gas this year compared to last year, and nearly $1,000 compared to 2014. More

The Fed Chair was criticized on a range of issues, from China and monetary policy to black unemployment and the strong dollar. More

Twitter's stock is sinking fast after the company reported that it lost customers in the fourth quarter of 2015. More

STEM3 Academy was started specifically for students with autism, ADHD and Asperger's Syndrome. Its STEM-based curriculum is breaking through barriers. More

The average price for domestic airfare dropped in the third quarter of 2015, and travel experts expect the trend to continue in 2016. More