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Current Futures: Dow -20.00, S&P -3.00, NASDAQ -3.50
European markets opened higher, but shortly after the opening bell the market plunged as the World Bank revised lower the global growth rate. U.S. futures traded in a the set pattern of June trading, with the overnight markets now trading into the red territory.
The global equity markets has been pushed forward over the last thee months of trading by the view that the global recession is easing, and companies will report strong earnings once again. However, a report issued recently by the World Bank contravenes this view, since the bank downgraded its growth projections for 2009. According to the World Bank, the global economy would contract a massive 2.9% in 2009, revised lower from 1.7% initially released in March. In the investment world, a growth rate for the global economy below 3% is seen as a contraction, TheLFB-Forex.com Trade Team said.
In the same report, the World Bank predicts that global trade may fall 9.7% this year. Such a steep drop in the global trade balance raises real issues for the emerging economies, which are reliant on exports and on foreign investments, something that may cause the aftermath of the credit crisis to hold longer in those parts of the world, TheLFB-Forex.com Trade Team notes.
In Europe, most stocks declined shortly after the opening bell. The only companies that advanced were from the raw materials industry, as Xstrata approached Anglo American to create one of the largest mining companies in the world. So far, Anglo American was up 9% on Monday morning, while Xstrata declined 1.7% as investors run merger-arbitrages between the two stocks.
Overnight, the U.K. Ftse declined 29.41 points (0.68%) to 4,316.52, while the German Dax lost 34.39 points (0.71%) to 4,805.07
Crude oil for July delivery was recently trading at $69.05 per barrel, lower by $0.50.
Gold for July delivery was recently trading lower by $2.80 to $933.40.
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