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International markets roundup

Switzer Daily
2 February 2016

NEW YORK - US stocks are lower as weak Chinese economic data exacerbates concerns about a global slowdown and oil prices resume their slide. The data from China shows that the world's second-largest economy's manufacturing sector contracted in January at the fastest pace since 2012. Oil prices fell about six per cent after the China data added to worries about demand and an OPEC source played down talk of an emergency meeting to stem the decline. Oil prices have fallen more than 70 per cent since mid-2014. Adding to the cautious note, data on Monday showed that US consumer spending was unchanged in December and manufacturing activity continued to contract in January. "The consumer spending numbers are a concern," said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas. "We keep hearing that there is pent-up consumer demand that we are going to see down the line but we've seen little evidence of that." At 0653 Tuesday AEDT, the Dow Jones industrial average was down 34.14 points, or 0.21 per cent, at 16,432.16, the S&P 500 was down 4.21 points, or 0.22 per cent, at 1,936.03 and the Nasdaq Composite index was up 0.79 points, or 0.02 per cent, at 4,614.75.

LONDON - Britain's top equity index has retreated from three-week highs with commodity shares falling after a factory survey in China, a major consumer of metals and oils in the world, disappointed investors.

The blue-chip FTSE 100 index closed 0.4 per cent weaker on Monday at 6,060.10 points, after falling to an intra-day low of 5,993.84 points. The index hit a three-week high in the previous session, but is still down more than 3 per cent since the beginning of 2016 on China-related concerns. The latest survey showed activity in China's manufacturing sector contracted at its fastest pace in almost three-and-a-half years in January, missing expectations and marking the sixth straight month of factory activity contraction. "With a week heavy on both macro and corporate data, it's all about PMI readings today and the manufacturing sector has not exactly given much to cheer about," said Brenda Kelly, analyst at London Capital Group.

"The FTSE started well but has run out of steam at 6,100, led by the energy sector as oil ... once again flounders."

HONG KONG - Friday's surprise move by Japan to negative interest rates sent its bond yields to new lows on Monday.

Then came data that showed Chinese manufacturing slowed last month at its fastest pace in more than three years. Friday's BoJ move set off its biggest one-day fall - roughly two per cent - in more than a year. MSCI's broadest index of Asia-Pacific shares outside Japan had edged up a modest 0.1 per cent, after losing eight per cent in January. Australia and Japan led regional markets with gains of 0.8 and two per cent, respectively. Chinese stocks slipped 1.5 to 1.7 per cent after the weak data there. January was the Shanghai market's worst month since the 2008 financial crisis with more than a 10 per cent loss.

Monday's economic data from China added to worries about the world's second-largest economy and increased calls for more policy easing from China. Growth slowed in both manufacturing and services in China. "In the short term, the surprise move by Japan will be a catalyst for global equities, but it only underlines the weakness of the global economy and we need to see some strong economics data for a sustainable rally," said Cliff Tan, head of global markets research with Bank of Tokyo-Mitsubishi UFJ.

WELLINGTON - The S&P/NZX 50 Index increased 4.28 points, or 0.1 per cent, to 6174.5.

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