8:26AM EST November 9. 2012 - NEW YORK -- World stock markets struggled Friday as fears persist that an unresolved so-called "fiscal cliff" threatens the U.S. economic recovery.
Not even encouraging Chinese economic figures erased negative market sentiment. Asian markets closed lower.
In European trading, the FTSE 100 index of leading British companies was down 0.8% at 5,727.72 while Germany's DAX 30 was 1.4% lower at 7,101.18. The CAC-40 in France fell 0.7% to 3,383.19.
U.S. stocks were poised to fall when the market opens at 9:30 a.m. ET. Dow Jones industrial average futures were down, suggesting a drop of nearly 100 points. The broader Standard Poor's 500 futures were down, indicating declines of about 0.5% -- about the same as futures trading in the Nasdaq composite index.
On Friday, investors will be focused on the latest consumer sentiment survey, which is likely to have dropped in November because of the impact of Superstorm Sandy.
In currency trading, the euro weakened to $1.2694 from to $1.2750 late Thursday. The dollar was roughly unchanged against the Japanese yen at 79.22 yen.
Crude oil for December delivery was down 49 cents to $84.60 in electronic trading on the New York Mercantile Exchange. The contract rose 65 cents to close at $85.09 on Thursday.
Since President Obama's re-election Tuesday night, markets have slumped worldwide as investors have refocused on challenges to the world economy. Many worry that gridlock in Washington will prevent the president and Congress from reaching a deal before $800 billion of tax increases and government spending cuts kicks in on Jan. 1.
Investors also have renewed fears about Europe's lingering debt crisis. European Central Bank President Mario Draghi warned that the economy of the 17 nations that use the euro remains weak and will struggle to grow even with "visibly improved" confidence among the currency union's financial markets.
Those fears offset somewhat upbeat indicators in China Friday that show signs of a possible recovery in the world's second-largest economy. The latest data showed that Chinese factory output rose, investment growth strengthened and inflation eased in October.
In Asia, Japan's Nikkei 225 index fell 0.9% to close at 8,757.60 and Hong Kong's Hang Seng shed 0.9% to end at 21,384.38. South Korea's Kospi retreated 0.5% to 1,904.41.
The Shanghai Composite Index closed down 0.1% to 2,069.07 and the Shenzhen Composite Index edged 0.4% lower to 828.46. Australia's SP ASX 200 dropped 0.5% to 4,462.00 after the central bank released a downbeat assessment of the country's economy.
In the two days since President Obama was re-elected, the stock market has reacted as though investors have "buyer's remorse." The post-Election Day stock swoon represents a paper loss of $600 billion, according to Wilshire Associates. There is a precedent for stock weakness during a president's second term in office.
The Dow has tumbled 434 points to 12,811.32, adding up to a two-day drop of 3.3%. The blue-chip stock gauge is has remained below the key 13,000 level since Wednesday, a level not touched since early August.
The losses could portend a less robust stock market in Obama's second term than during his first four-year stint in the White House, when the Dow rose 55%, according to data from Bespoke Investment Group. The research firm analyzed the Dow's performance during second terms of the seven previous re-elected presidents and found returns were far skimpier than in the first terms.
The average gain for first-term presidents was 67%, and stocks were up nearly 90% of the time. In contrast, returns dropped to 10.2%, or annual gains of just 2.5% per year, in the second term. And positive returns occurred just 43% of the time.
"While voters were happy to re-elect these presidents based on their first-term market returns, a sense of 'buyer's remorse' certainly followed suit," noted Paul Hickey, Bespoke's co-founder. His take on the prospect of 2.5% annual gains for the next four years? "It's hardly anything to get excited about," he says.
Contributing: The Associated Press
Source: http://www.news.theusalinks.com/2012/11/09/stocks-set-for-lower-ending-to-election-week/
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