Global stocks face pressure of Chinese economic slowdown


Devdiscourse News Desk | Updated: 14-01-2019 22:48 IST | Created: 14-01-2019 22:00 IST
Global stocks face pressure of Chinese economic slowdown
Data from China showed imports fell 7.6 per cent year-on-year in December.

World stock indexes fell while the yen rose against the dollar on Monday after a shock contraction in Chinese trade reignited fears of a sharper slowdown in global growth and caused investors to sell riskier assets. Copper prices fell and the Australian and New Zealand dollars also declined following the China news, which added to worries that U.S. tariffs on Chinese goods were taking a toll on the world's second-largest economy.

"The biggest theme (in the market today) is risk-off," said John Doyle, vice president of dealing and trading at Tempus, Inc. Data from China showed imports fell 7.6 per cent year-on-year in December while analysts had predicted a 5-per cent rise. Exports dropped 4.4 per cent, confounding expectations for a 3-per cent gain. The United States and China - the world's two largest economies - have been in talks for months to try and resolve their bitter trade war, with no signs of substantial progress.

Adding to the gloom were weak industrial output numbers from the eurozone, which showed the largest fall in nearly three years. Softening demand has been felt around the world with sales of goods ranging from iPhones to automobiles slowing, prompting profit warnings from Apple among others. Trade-sensitive shares fell, including Boeing Co Caterpillar Inc, though U.S. stock investors also were on edge as the U.S. earnings season kicked off.

"We're seeing some cautiousness heading into the beginning of earnings season as people are worried about guidance and what companies are going to say, especially in relation to trade," said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York. The Dow Jones Industrial Average fell 139.63 points, or 0.58 per cent, to 23,856.32, the S&P 500 lost 16.99 points, or 0.65 per cent, to 2,579.27 and the Nasdaq Composite dropped 63.27 points, or 0.91 per cent, to 6,908.21.

Citigroup Inc shares were higher after the bank beat profit estimates as lower expenses offset a drop in quarterly revenue. The pan-European STOXX 600 index lost 0.38 per cent and MSCI's gauge of stocks across the globe shed 0.62 per cent. U.S. Treasuries tracked the European bond market but were little changed in late-morning U.S. trading. In the foreign exchange market, the Japanese yen, a safe-haven currency that benefits in times of geopolitical turmoil, strengthened against the U.S. dollar by 0.33 per cent. The Australian dollar, which was down 0.24 per cent, and kiwi dollar, which was down 0.12 per cent. China is Australia's largest trade partner.

COMMODITIES SUFFER

The prospect of slowing global growth also roiled some commodity markets. Industrial metals copper and aluminium lost ground in London and Shanghai. Three-month copper on the London Metal Exchange was bid down 0.9 per cent at $5,888 a tonne after failing to trade in official rings, its lowest level in more than a week. Oil prices were down slightly. U.S. crude fell 0.54 per cent to $51.31 per barrel. Brent crude, the international benchmark, fell 46 cents to $60.02 a barrel.

(With inputs from agencies.)

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