Adding to this, corporate earnings have been consistently undershooting expectations — U.S. S&P 500-listed companies’ first quarter earnings are down 5.4 percent versus year-ago levels and are set for a third quarter of declines.
“The deflationary pressures remain and it’s hard to see markets making much headway at the moment,” said Richard Griffiths, associate director at Berkeley Futures.
Investors are becoming increasingly convinced that the world’s biggest central banks are powerless to stem the growth malaise despite cutting rates to zero or into negative territory and buying trillions of dollars worth of bonds.
MSCI’s index of world stocks was down a quarter of a percent to 2-1/2 week lows after falling 1 percent on Tuesday for its biggest one-day fall in a month.
Emerging equities also extended losses, falling almost 1 percent.
European stocks opened on a weak note, with the pan-European FTSEurofirst 300 index, hovering just off three-week lows hit on Tuesday when it slumped almost 2 percent.
Bourses in London, Paris and Frankfurt were flat to lower, dragged down by weak prices for growth-reliant commodities.
Shares in Dialog Semiconductor slumped 9.5 percent after the maker of chips used in Apple and Samsung phones, reported a 58-percent drop in underlying operating profit, continuing the saga of underwhelming profits at tech firms.
“We may have the odd move higher, but we remain in a longer-term bear market,” said Andreas Clenow, chief investment officer at Zurich-based ACIES Asset Management.
The worst of the near-term market angst may be dissipating, however.
The flight from risk had played out in forex markets with investors favoring currencies from economies with current account surpluses, such as Japan. But the yen slipped off 18-month highs against the dollar of 105.55.
The dollar rose a quarter percent against a basket of currencies, recovering from 15-month lows hit on Tuesday.
On bond markets too there were some signs of stabilization.
U.S. Treasuries and German Bunds, typically the assets of choice in a weak-growth environment, saw yields tumble this week, with the former hitting two-week lows while 10-year Bund yields posted their biggest daily fall of 2016.
Yields crept marginally higher on Wednesday, though the 10-year Bund yield stayed almost 10 bps above last Friday’s levels when yields were nearing six-week highs.
Crude futures also inched higher after two days of losses though Brent remains around 7 percent below 5-1/2-month highs hit at the end of April.
Copper, often viewed as a key growth barometer, also remained under the cosh as Shanghai copper futures slid more than 1 percent. London three-month copper however was just marginally weaker after Tuesday’s 2.6 percent fall.