Overnight, the World Bank announced that it had cut its growth forecast for China, with World Bank economist Bert Hofman telling a briefing in Singapore that China was experiencing a "double whammy" of weakening exports and falling domestic demand. The World Bank has cut its growth forecast for China to 7.7% for this year and 8.1% for next year, emphasizing that it still expects a soft landing for the economic giant.
Today's Columbus Day holiday means that no economic data is scheduled for release in the U.S., so investors' attention is likely to be focused on China and on the latest developments in the eurozone crisis.
Investors may also be cautious about taking large new positions ahead of the start of this quarter's earnings season, which gets underway this week. The first of the major quarterly results is due after the closing bell on Tuesday, when Alcoa, often considered to be a bellwether for the wider economy, releases its latest update.
Shares in Apple (Nasdaq: AAPL ) were down in premarket trading this morning and may drop further today after China's Foxconn, which assembles iPhones, announced that it had been forced to halt production for the second time on Friday due to ongoing labor disputes.
In Europe, the World Bank's revised forecast for Chinese growth contributed to falls across the board this morning, with most major European indexes trading lower by 7 a.m. EDT. The DAX was down 1.4%, the CAC was down 1.1%, the FTSE MIB was down 1.8%, and the IBEX was down by 0.9%.
In London, the FTSE 100 (INDEX: ^FTSE ) was down by 0.7% at 7 a.m. EDT as mining and financial shares shed value on fears over weakening global growth and the ongoing stalemate in the eurozone, where negotiations over Greek cuts are continuing today at a meeting of the eurozone finance ministers in Luxembourg. There was one bright note, albeit a formality: The long-awaited Eurozone Stability Mechanism will be formally inaugurated later today. The ESM is intended to be used to bail out struggling eurozone member states.
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