On 08 March, 2016 – Global stocks declined
Shares retreated on poor Chinese merchandise trade data and the resurfacing global growth worries.
United States
Stocks fell sharply Tuesday after gloomy merchandise trade data from China reignited concerns about the global economy. Losses accelerated in late afternoon. The declines were led by materials and energy shares. The Dow Jones industrials were down 0.6 percent, the S&P tumbled 1.1 percent and the Nasdaq retreated 1.3 percent.
Murphy Oil and the oil rig operator Transocean declined. Shake Shack dropped after the company delivered results and an outlook that disappointed investors. United Continental retreated after two investment firms went public in an effort to add six of its nominees to the board. They also want to give a prominent role to the ex-chief executive credited with saving Continental more than a decade ago. The two firms, Altimeter Capital Management and PAR Capital Management, own a combined 7.1 percent stake of the airline. Dick’s Sporting Goods was down after the company’s fourth quarter results fell short of expectations as a warmer-than-usual winter crimped the retailer’s sales. Its guidance for the future also disappointed. Urban Outfitters advanced after the company reported strong earnings and improved margins during the holiday season.
Weak data on trade in China seemed to stoke long-smoldering concern that the global economy is weaker than anticipated. China’s exports plunged 25.4 percent in February from a year earlier, as weak global demand and a business shutdown during the Lunar New Year holiday combined to depress sales. Imports fell 13.8 percent.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down 90 US cents to US$1,167.00. Copper futures were down 2.9 percent to US$2.22. WTI spot crude was down US$1.60 to US$36.30. Dated Brent spot crude was down US$1.36 to US$39.48. The US dollar was up against the euro, pound, Swiss franc and the Canadian and Australian dollars. However, it declined against the yen. The Dollar Index was up 0.1 percent. The yield on US Treasury 30 year bond was down 6 basis points to 2.64 percent while the yield on the 10 year note declined 7 basis points to 1.83 percent.
Europe
Stocks retreated Tuesday, following Asian markets lower after disappointing Chinese merchandise trade data sparked concerns over slowing global growth and triggered a sharp sell-off in mining stocks. A pullback in crude oil prices also contributed to Tuesday's weakness. The FTSE, CAC and DAX declined 0.9 percent each while the SMI lost 0.6 percent. Investors are also waiting for the European Central Bank announcement Thursday.
The Bank of England will not tell people how to vote in the EU referendum in June, Governor Mark Carney said Tuesday. The Bank will conduct analysis but it should not be considered as recommendations for or against Brexit, he told Treasury Committee. It will be important for the BoE to retain the flexibility and overall supervisory coherence necessary to meet its financial stability objectives.
RWE declined after suspending its dividend and announcing a radical restructuring of its British unit Npower. E.ON also dropped. Dialog Semiconductor tumbled as the manufacturer of semiconductor-based system solutions reported a 29 percent decline in fourth quarter net income. Automakers Volkswagen, Daimler, BMW, Renault and Peugeot retreated. Both Deutsche Bank and Commerzbank were lower. Technip and Total were down. Burberry Group climbed on reports that the company has asked its advisers at Robey Warshaw to help fend off a potential takeover bid. Weak trade data from China weighed heavily on mining stocks. Glencore, Anglo American, Antofagasta, Rio Tinto, BHP Billiton and Fresnillo tumbled.
The second estimate of fourth quarter Eurozone gross domestic product confirmed the original estimate of growth. GDP was up 0.3 percent on the quarter and 1.6 percent from a year ago. Germany's industrial production recovered in January as mild weather boosted construction activity. Industrial output grew 3.3 percent on the month and 2.3 percent from the same month a year ago.
Asia Pacific
Most Asian shares were down after Chinese merchandise trade figures rekindled global growth worries and revised fourth quarter GDP data from Japan underscored the challenges facing Premier Shinzo Abe in restoring growth. A sharp overnight rally in oil and iron ore prices helped limit the downside.
The Shanghai Composite recovered from steep losses to end 0.1 percent higher. The index fell over 3 percent in early trading after data showed China's trade performance deteriorated sharply in February, with both exports and imports declining more than expected by analysts. Exports dropped 25.4 percent from a year earlier in US dollar terms and imports dropped 13.8 percent to extend declines for the 16th straight month. The data no doubt reflected seasonal distortions due to the timing of the Lunar New Year holidays which this year fell during February. The Hang Seng retreated 0.7 percent.
The Nikkei declined 0.8 percent as a stronger yen weighed on exporters and sluggish Chinese data fueled concerns about growth. Sony and Toshiba tumbled as the US dollar hit a one week low against the yen. Suzuki Motor declined after saying it would issue ¥200 billion in convertible bonds and utilize most of its proceeds towards expanding its operations in India. Honda, Mazda and Nissan also declined. Nippon Telegraph & Telephone retreated on a Nikkei report that it will likely offer more than ¥400 billion to acquire Dell's IT services business. SoftBank Group advanced after announcing a new structure to separate its domestic mobile business from its overseas investments. Fourth quarter gross domestic product was down an upwardly revised 0.3 percent on the quarter. The annualized pace also was revised upward to a decline of 1.1 percent from the original estimate of a decline of 1.4 percent.
Both the S&P/ASX and All Ordinaries retreated 0.7 percent. Miners ended mixed after iron ore prices jumped nearly 20 percent on Monday to post their biggest single-day gain on record. While BHP Billiton and Rio Tinto were down, smaller rival BC Iron and Arrium climbed. Fortescue Metals slumped after announcing a non-binding agreement with Brazil's Vale to pursue long-term opportunities through joint ventures. Oil firm Santos and Origin Energy were down. The big four banks also retreated.
The Kospi slid 0.6 percent, a one week low. The Sensex inched up 0.1 percent.
Global Stock Markets
Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
The UK posts January industrial production. The Bank of Canada publishes its monetary policy decision. In the US, the weekly EIA petroleum status report will be released.