Global equities markets fell on Thursday as weak Chinese economic data and mixed messages on the progress of trade talks between China and the United States weighed on investor sentiment.
Earlier, news of the collapse of the summit between U.S. President Donald Trump and North Korean leader Kim Jong Un on denuclearization triggered flight-to-quality bids in lower-risk assets such as the Swiss franc.
Data showed that Chinese factory activity contracted to a three-year low and China’s export orders fell at their fastest pace since the global financial crisis a decade ago, adding to ongoing worries about a slowdown in the Chinese economy and its impact on global markets.
“There’s been a lot of stimulus measures in China, and it’s still not showing up in the numbers as soon as people would like,” said Keith Lerner, chief market strategist at SunTrust Advisory Services in Atlanta.
Receding optimism on the U.S.-China trade talks also dampened sentiment.
U.S. Trade Representative Robert Lighthizer said his office was taking legal steps to implement Trump’s announcement on Sunday to delay a tariff increase on more than $200 billion worth of Chinese goods that had been scheduled to take effect on Friday. But Lighthizer’s office later issued a statement saying that it was not abandoning the threat of increasing the tariffs to 25 per cent from 10 per cent.
Canada’s main stock index declined on Thursday, led by losses in the heavy-weight financial sector on the back of disappointing quarterly earnings from Toronto-Dominion Bank.
Canada’s second-biggest lender fell 2.4 per cent after reporting lower-than-expected rise in earnings, hurt by losses at its wholesale banking business.
The heavy-weight financial group of stocks fell 0.8 per cent, the most among the sectors trading lower.
Canadian Imperial Bank of Commerce fell 2.7 per cent after the country’s fifth biggest-lender reported a bigger-than-expected decline in quarterly earnings.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially down 75.29 points, or 0.47 per cent, at 15,999.01.
Energy stocks closed down 0.5 per cent with Seven Generations Energy Ltd. losing 9.1 per cent and Tourmaline Oil Corp. dipping 5.5 per cent.
On Wall Street, data showing better-than-expected U.S. economic growth in the fourth quarter helped offset worries over China. Gross domestic product rose 2.9 per cent for the year, just shy of the 3-per-cent goal set by the Trump administration.
“The numbers came out in a pretty robust way,” said Mona Mahajan, U.S. investment strategist at Allianz Global Investors in New York. “There hasn’t been much reaction because of the geopolitical uncertainty in the headlines.”
The U.S. economic data also prompted a rise in Treasury yields and a retreat in gold prices.
Benchmark 10-year U.S. Treasury notes last fell 5/32 in price to yield 2.7113 per cent, from 2.693 per cent late on Wednesday.
Spot gold dropped 0.4 per cent to $1,314.29 an ounce.
Global equities scaled a four-month high earlier this week, helped by upbeat expectations about the U.S.-China trade talks. But on Thursday, the MSCI All-Country World Index dropped 0.3 per cent and was on track for a third day of losses, albeit modest ones.
The Dow Jones Industrial Average fell 69.03 points, or 0.27 per cent, to 25,916.13, the S&P 500 lost 7.88 points, or 0.28 per cent, to 2,784.5 and the Nasdaq Composite dropped 21.98 points, or 0.29 per cent, to 7,532.53
The MSCI International EM Price Index fell 1.0 per cent while the pan-European STOXX 600 recovered from early losses to end 0.1 per cent higher.
According to equity market analysts in Reuters polls, global stock markets in 2019 will at best only recoup losses from the deep sell-off late last year. They see the risk skewed more toward a sharp fall by mid-year.
In currency markets, the dollar index, which measures the greenback against a basket of six major currencies, was little changed. The euro ticked up 0.1 per cent against the dollar.
The Swiss franc rose 0.4 per cent against the dollar, rising following the news of the end of the summit between Trump and Kim.
Brent oil fell while U.S. crude futures steadied on Thursday as U.S.-China trade tensions persisted, both Chinese and Indian economies showed signs of slowing and news of surging U.S. production undermined OPEC-led output curbs.
Global benchmark Brent crude futures for April ended the session down 36 cents, or 0.5 per cent, at $66.03 a barrel. The more active May Brent contract fell 27 cents, or 0.4 per cent, to settled at $66.31.
U.S. West Texas Intermediate (WTI) crude for April delivery rose 28 cents, or 0.5 per cent, to settle at $57.22.
For February, U.S. crude gained 6.4 per cent while Brent crude rose 6.6 per cent. Prices have been buoyed since January by supply cuts from the Organization of the Petroleum Exporting Countries and allies such as Russia - a group known as OPEC+.
Reuters