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Market Buzz: Panic cooling as week ends

Market Buzz: Panic cooling as week ends
Investors expect Russian stocks to bounce back slightly on Friday, with floors opening the day in the black.

Negative Flash PMI data from China along with uncertainty about the US Federal Reserve’s bond-buying program saw Russian stocks slump on Thursday: The MICEX closed 3.56 percent lower at 1396.90 and the RTS fell 4.18 percent to close at 1400.84.

Markets worldwide reacted sharply to negative news in China and the US. Weak manufacturing data from China indicated that its manufacturing sector may be contracting, meaning the world’s second-largest economy may not be growing at as fast a pace as predicted.

Japanese stocks suffered major losses on Tuesday: The Nikkei 225 saw its biggest one-day drop – 7.3 percent – since Japan was hit by a devastating tsunami more than two years ago. Other major indices in Asia fell as well, with Hong Kong's Hang Seng shedding 2.5 percent and South Korea's Kospi dropping 1.2 percent. Markets in Australia, Thailand, Taiwan and Singapore also fell.

European markets also posted sharp losses on Thursday. The Stoxx Europe 600 index slumped 2.1 percent to 303.99, the FTSE 100 dropped 2.1 percent, Germany’s benchmark DAX 30 – which has been posting all-time highs recently – lost 2.5 percent, and the French CAC-40 slid 2.7 percent.

On Friday, the Ifo Institute will publish a report on the business climate in Germany. Revised data will also be released on Germany’s first-quarter economic growth and the Gfk consumer climate index. Also, the UK will release industry data on mortgage approvals, an important indicator of demand in the housing market.

Major US indices rebounded during the day Thursday, but still closed slightly lower. The Dow Jones Industrial Average lost 0.08 percent to close at 15294.50, the S&P 500 slipped 0.29 percent to close at 1650.52, and the Nasdaq Composite was down 0.11 percent to close at 3459.42.

Concerns are mounting about whether the US Fed intends to pull out of its $85-billion-a-month bond-buying program, which has been largely responsible for the multi-year highs witnessed in global markets in recent weeks.

Data released Thursday showed that the number of American who filed for jobless claims last week dropped by 23,000 to 340,000, slightly beating expectations. The US flash PMI index fell to 51.9 in May from 52.1 in April, its lowest reading since last October. On Friday, the US will wrap up the week with an update on durable goods orders, a key production indicator.

Asian stocks are seeing further losses on Friday after being struck by unexpectedly weak Chinese manufacturing data and news from the US Fed. Japan's Nikkei is still vulnerable: After a massive gain in the wake of yesterday’s session, it reversed later in the day, falling 0.7 percent to 14,391.74. South Korea's Kospi rose 0.1 percent to 1,971.23, Hong Kong's Hang Seng fell 0.5 percent to 22,553.60 and Australia's S&P/ASX 200 lost 1.7 percent to 4,976. Benchmarks in the Philippines, Taiwan and New Zealand also fell.

Oil is currently trading lower, with Brent down 0.09 percent to $102.30 and WTI down 0.3 percent t0 $93.90.