UKX FTSE 100 Index

By Paul J. Davies 

Stocks in Europe and several Asian markets slipped Thursday following a weaker close for U.S. markets and poor economic data from South Korea, one of Asia's biggest exporters.

The Stoxx Europe 600 index was down 0.2% and the U.K.'s FTSE 100 dropped 0.3% as investors digested big falls in revenue and profits in the first quarter from major banks UBS and Barclays.

Futures pointed to a mixed open on Wall Street with the S&P 500 priced to be just 0.05% higher and the Dow Jones Industrial Average 0.05% lower.

In Asia, the Korean Kospi index was down 0.5% after a fourth-straight month of declining exports dragged on the local economy. South Korean GDP shrank by 0.3% in the first quarter, its worst performance in more than a decade. The result was a sharp drop from 1% growth in the final quarter of 2018 and much worse than expectations of 0.3% growth.

"The biggest quarterly contraction in Korean GDP since the global financial crisis hit in fourth-quarter 2008 has to be bad news," said Robert Carnell, chief economist in Asia at ING. "The components of GDP weakness don't bode well for the quarter ahead. It isn't hard to come up with a set of figures that would deliver a...technical recession."

Stocks in China and Hong Kong also were lower even though the Chinese central bank signaled support for the economy by saying it had no intention of tightening monetary policy. Japan's central bank was also supportive, revising its guidance to say it didn't expect to increase interest rates for at least another year. The Nikkei 225 rose about 0.5%.

Still, the Korean data has added to other weak numbers in recent days, including worse-than-expected Australian inflation data and a disappointing reading in a German business-climate survey. The figures encouraged investors to put more money into bonds than equities globally, according to strategists at Barclays, lifting prices and pushing down yields.

Sweden is another country to be suffering unexpectedly low inflation, which led its central bank on Thursday to delay its next expected interest-rate rise, meaning it will now likely keep its main rate at minus-0.25% for the rest of this year having previously suggested a rise would come in the second half of 2019.

The Swedish Krona fell sharply against both the dollar and the euro in response and was down more than 1% against both currencies.

The steady drumbeat of such signals have been encouraging investors to put more money into bonds than equities globally all year, according to strategists at Barclays, lifting prices and pushing down yields.

"Beyond the near-term reflationary effect of rising oil prices, a hawkish shift [toward interest-rate rises] in central banks' rhetoric is likely needed for bond yields to move much higher," they said.

German 10-year bund yields dropped back into negative territory on Wednesday and sat at -0.013% on Thursday morning. U.S. 10-year Treasury yields also fell on Wednesday, but were marginally higher Thursday at 2.528% from 2.520%. Bond yields and prices move in opposite directions.

The WSJ dollar index, which measures the dollar against a basket of currencies, was up 0.1% at 91.10.

In commodities, oil continued to move higher, with Brent crude up 1% at $75.35 a barrel. Gold was flat at $1,279.70 an ounce.

Write to Paul J. Davies at paul.davies@wsj.com

(END) Dow Jones Newswires

April 25, 2019 05:43 ET (09:43 GMT)

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