World stock indexes fell 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 and other commodity 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 yen rose against the dollar.
“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 to resolve their bitter trade war, with no signs of substantial progress.
Adding to the gloom were weak industrial output numbers from the euro zone, 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.
Canada’s main stock index finished slightly higher on Monday, extending its winning streak to a seventh straight day.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially up 36.35 points, or 0.24 per cent, at 14,975.53.
Seven of the index’s 11 major sectors were higher, led by a 4.4-per-cent jump in health care stocks as marijuana producers increased. Canopy Growth Corp. rose 11.2 per cent, while Aurora Cannabis Inc. was up 6.3 per cent.
The materials group was down 0.1 per cent despite a boost by shares of Goldcorp Inc , which jumped 7.5 per cent, after bigger rival Newmont Mining Corp said it would buy the gold miner in a deal worth $10-billion.
Norbord Inc. slipped 4.6 per cent, while West Fraser Timber Co. Ltd. lost 2.5 per cent.
In New York, the Dow Jones Industrial Average fell 87.4 points, or 0.36 per cent, to 23,908.55, the S&P 500 lost 13.88 points, or 0.53 per cent, to 2,582.38 and the Nasdaq Composite dropped 65.56 points, or 0.94 per cent, to 6,905.92.
Citigroup Inc shares were higher after the bank beat profit estimates as lower expenses offset a drop in quarterly revenue.
British lawmakers are scheduled to vote Tuesday on Prime Minister Theresa May’s deal covering Britain’s planned departure from the European Union, and all indications are that the deal will be rejected. That could contribute to volatility for U.K. markets, particularly the pound.
Some British legislators say the country should reconsider its decision to leave the bloc, possibly by another referendum. Others think that the country should depart on March 29 without a deal.
The FTSE 100 index fell 0.9 per cent and the pound rose to $1.2865 from $1.2845.
The pan-European STOXX 600 index lost 0.48 per cent and MSCI’s gauge of stocks across the globe shed 0.44 per cent.
U.S. Treasury yields turned higher on Monday, after trading mostly lower, as risk sentiment improved after President Donald Trump said he was not looking to declare a national emergency amid a partial government shutdown.
In the foreign exchange market, the Japanese yen, a safe-haven currency that benefits in times of geopolitical turmoil, rose against the U.S. dollar.
The Australian dollar, which was down 0.24 percent, and kiwi dollar, which was down 0.12 per cent. China is Australia’s largest trade partner.
The prospect of slowing global growth also roiled some commodity markets. Industrial metals copper and aluminum 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 ton after failing to trade in official rings, its lowest level in more than a week.
Oil prices fell more than 2 per cent on Monday, taking a pause after a recent rally, pressured by data showing weakening imports and exports in China that raised new worries about a global economic slowdown hurting crude demand.
Brent crude futures lost $1.49, or 2.5 per cent, to settle at $58.99 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell $1.08 to settle at $50.51 a barrel, a 2.1-per-cent loss.
Prices have gained more than 18 per cent since sinking to one-and-a-half year lows in late December.
“We are thus far viewing today’s price pullback as a deserved correction,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note. “Some of the weakness appeared to develop in concert with a selloff in the equities while some profit-taking was also apparent given the fact that domestic fundamentals have yet to post improvement this year.”
Reuters and The Associated Press