Stocks start 2019 on back foot after weak Chinese data
Stock markets started the new year with a tumble as disappointing Chinese economic data on Wednesday renewed concerns that a global trade war is weighing on growth.
In Europe, France's CAC 40 fell 1.6 per cent to 4,653 and Germany's DAX retreated 0.2 per cent to 10,531. Both had opened with losses in excess of 2 per cent and 1 per cent, respectively. London's FTSE 100 was down 0.9 per cent to 6,667. On Wall Street, futures for the Standard & Poor's 500 and for the Dow Jones Industrial Average were both down 1.4 per cent.
The Shanghai Composite Index fell 1.2 per cent to 2,465.29 and Hong Kong's Hang Seng lost 2.8 per cent to 25,130.35. Seoul's Kospi gave up 1.5 per cent to 2,010.00 and Sydney's S&P-ASX 200 sank 1.2 per cent to 5,557.80. India's Sensex shed 1.2 per cent to 35,817.25 and Singapore and Taiwan also declined. Tokyo's markets were closed.
A government survey and one by a major business magazine showed Chinese manufacturing weakened in December as global and domestic demand cooled. Forecasters said that could send shockwaves through other economies, particularly in Asia, that supply raw materials
and components. Chinese export growth has held up as producers rushed to fill orders before possible new US tariff hikes in Washington's trade battle with Beijing, but forecasters said that effect may be fading.
The Chinese slowdown "raises a few red flags", said Mizuho Bank's Vishnu Varathan in a report. The slide is "potentially symptomatic of far sharper underlying demand pullback", he said.
Investors are looking ahead to talks this month aimed at settling a US-Chinese tariff battle that threatens to dampen global economic growth. Presidents Donald Trump and Xi Jinping agreed December 1 to a 90-day suspension of further tariff hikes in their fight over Beijing's technology policy but left in place penalties already imposed. No date has been announced but both sides have expressed interest in a settlement. Economists say the 90-day window is likely too small to resolve the full range of issues that bedevil their relations. Mihir Kapadia, CEO of Sun Global Investments, says the uncertainty in financial markets will "continue until further clarity emerges from the US and China talks".
The dollar declined to 109.16 yen from Monday's 109.67. The euro retreated to $1.1430 from $1.1466.
Benchmark US crude lost 44 cents to $44.97 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained 8 cents on Monday. Brent crude, used to price international oils, slumped 55 cents to $53.25 per barrel in London. It added 59 cents the previous session.