Weak Chinese trade, US rate hike fears sink global stocks

NEW YORK - Another contraction in Chinese trade and rising expectations of a US interest rate hike in December sent most global markets tumbling Monday.

China's 18.8-percent fall in imports from a year ago, and a 6.9 percent drop in exports, spelled more sluggishness in the world's second-largest economy and in global growth more generally, hitting commodity prices as well as the shares of companies like Caterpillar which depend on them.

Supporting that view, the Organisation for Economic Co-operation and Development on Monday cut its forecast for global growth to 2.9 percent this year and 3.3 percent in 2016, calling the stagnation in global trade "deeply concerning".

On top of that was the strong US jobs data on Friday that gave more support for the US Federal Reserve hiking interest rates for the first time in nine years, which would raise the borrowing costs of governments and companies around the world.

Wall Street's key indices all tumbled 1.0 percent with little to spur buying after six straight weekly gains.

Mace Blicksilver of Marblehead Asset Management said US investors have a number of concerns, and that the market was "probably stronger than it should have been" last week.

"A little weak China data didn't help," he added.

European markets fell as brokers pondered the impact of higher US rates and slower global growth. London's FTSE dipped 0.9 percent, Frankfurt's DAX 30 lost 1.6 percent and Paris' CAC 40 dropped 1.5 percent.

Friday's strong US jobs report "pretty much made it a given that a US rate hike will take place after all in 2015," said Markus Huber, senior analyst at broker Peregrine & Black.

Ironically Chinese shares pushed higher, buoyed by news that the government was lifting a four-month ban on IPOs.

Chen Jiahe of Cinda Securities said regulators were more comfortable "after leveraged funding through outside channels was cleared and investor confidence recovered."

The dollar stabilized after last week's surge on the rate expectations, trading at 123.18 yen and $1.0749 per euro in late deals.

Still, said Joe Manimbo of Western Union Business Solutions, "market focus on monetary policies that are expected to loosen in Europe and tighten in the US suggests more open road for the dollar to run over the foreseeable future."

The key figures around 2200 GMT

New York - Dow:            DOWN 1.0 percent at 17,730.48 (close)

New York - S&P 500:     DOWN 1.0 percent at 2,078.58 (close)

New York - Nasdaq Composite:    DOWN 1.0 percent at 5,095.30 (close)

London - FTSE 100:       DOWN 0.9 percent at 6,295.16 (close)

Frankfurt - DAX 30:        DOWN 1.6 percent at 10,993.241 (close)

Paris- CAC 40:               DOWN 1.5 percent at 4,911.17 (close)

EURO STOXX 50:           DOWN 1.4 percent at 3,418.36 (close)   

Tokyo - Nikkei 225:      UP 2.0 percent at 19,642.74  (close)

Euro/dollar:                    UP to $1.0748 from $1.0742 late Friday

Dollar/yen:                     UP to 123.19 yen from 123.16 yen late Friday

source: interaksyon.com

Wall St. drops as China data rattles investors

NEW YORK - US stocks fell sharply in afternoon trading on Monday and were set for their worst third-quarter performance in four years as investors worried about the health of China's economy and its potential impact on the timing of a U.S. interest rate increase.

The Nasdaq composite and S&P 500 both dropped more than 2 percent.

Much of the damage came from pharmaceutical and biotech stocks, including Allergan and Gilead Sciences, with the sector still bleeding a week after Democratic presidential candidate Hillary Clinton criticized drug pricing.

The Nasdaq biotechnology index fell 6 percent following its worst week in seven years. Among the S&P sectors, the health care index was the deepest decliner, down 3.66 percent.

"The broad healthcare sector and China are hurting the market. It's time for risk-off and there's no place to hide," said Richard Weeks, managing director at HighTower Advisors in Vienna, Virginia.

Profits at Chinese industrial companies fell 8.8 percent, fresh data showed, pushing down shares of raw material producers and energy companies. Oil prices fell more than 2 percent.

U.S. consumer spending rose more than expected in August, data showed on Monday, appearing to add to the case for an interest rate increase this year.

However, contracts to buy previously owned U.S. homes decreased, indicating the robust housing market could be losing some steam.

The Federal Reserve held off from raising rates at its September meeting, citing concerns about the global economy, notably China, among other factors.

New York Federal Reserve President William Dudley on Monday added to expectations for a rate increase, suggesting the central bank could pull the trigger as soon as October.

Several other Fed officials are scheduled to speak during the week, including Chair Janet Yellen on Wednesday.

Investors will also scrutinize September non-farm payrolls data set for release on Friday.

At 2:41 pm, the Dow Jones industrial average was down 1.65 percent at 16,045.25. The S&P 500 lost 2.23 percent, to 1,888.26 and the Nasdaq Composite dropped 2.72 percent to 4,559.05.

Billionaire investor Carl Icahn said the U.S. Federal Reserve's low interest rates are creating bubbles in markets for art, property and high-yield "junk" bonds, in a video to be released on Tuesday.

The CBOE Volatility index, known as Wall Street's "fear gauge", jumped 16 percent to 27.37, well above its long-term average of 20.

Alcoa's shares jumped 2.70 percent after the aluminum producer said it would split into two publicly-traded companies.

Apple fell 1.53 percent despite reporting that it sold a record number of its new iPhones in their first weekend.

Declining issues outnumbered advancing ones on the NYSE by 2,744 to 337. On the Nasdaq, 2,323 issues fell and 509 advanced.

source: interaksyon.com