NEW YORK: Global equity markets and commodities dropped yesterday, weighed by concerns over the economic health of China and other big emerging markets in a week filled with key economic data.
An 8.8 percent drop in Chinese industrial firms’ profits and a plunge of nearly 30 percent in miner Glencore’s London-traded shares ignited the latest round of worry, sending copper back below $5,000 a tonne.
“The Chinese industrial profit report for August was dramatically down; that just gives the market another reason to sell,” said Richard Weeks, managing director at HighTower Advisors in Vienna, Virginia.
“Fundamentally there’s no compelling reason for longer-term investors to get more bold.”
Market participants have already been cautious ahead of a week of key economic data, including eurozone inflation on Wednesday, Chinese industrial and service sector PMIs on Thursday and US jobs figures on Friday.
In addition, a raft of US Federal Reserve officials are scheduled to speak, including Chair Janet Yellen on Wednesday.
New York Federal Reserve President William Dudley added to expectations of an early rate increase, suggesting the central bank could pull the trigger as soon as in October.
The Dow Jones industrial average fell 265.27 points, or 1.63 percent, to 16,049.4, the S&P 500 lost 40.97 points, or 2.12 percent, to 1,890.37 and the Nasdaq Composite dropped 118.14 points, or 2.52 percent, to 4,568.36.
The S&P 500 was on track for its biggest daily percentage drop since September 1.
Along with data that may give a clearer reading of China’s economic health, Friday’s US non-farm payrolls release will be watched for clues on whether rates might rise this year.
The Fed recently delayed a widely anticipated rate hike on concerns over sluggish Chinese growth and market volatility.
The flash reading of annual eurozone inflation is due on Wednesday, with a Reuters poll forecasting a zero reading in September. A slip into negative territory would fuel speculation about more European Central Bank stimulus, six months after the eurozone’s central bank began a massive asset-purchase programme.
The FTSEuroFirst index of 300 leading European shares closed down 2.2 percent while MSCI’s all-country world index declined 1.8 percent.
The US 10-year Treasury note rose 19/32 in price to yield 2.1002 percent as global concerns reduced investor appetite for risk and increased demand for safe-haven US bonds.
Commodities markets were also pressured, with US crude oil futures off 2.8 percent to $44.40 a barrel while Brent crude lost 2.6 percent to $47.33 a barrel as worries about the global economy outweighed an increase in US investors’ crude holdings.
Emerging markets remained a key pressure point due to fears that US interest rates could soon start heading higher even as global growth is tepid and commodities markets battered. MSCI’s emerging market index fell 1.1 percent.
Meanwhile, Singapore entered a bear market as Asian stock markets slumped Monday on fears about faltering China growth and the prospect of higher US interest rates.
The benchmark Straits Times Index ended down 1.4 percent — at its lowest in over three years and down 21 percent from an April peak — after data showed profits at China’s industrial companies fell 8.8 percent year-on-year in August.
Shanghai bucked the general Asian trend, staging a recovery after a morning sell-off and ending 0.27 percent higher despite the profits data.
Tokyo ended 1.32 percent lower as the stronger yen weighed on exporters. Manila ended 1.47 percent lower, Jakarta shed 2.11 percent and Bangkok was 1.79 percent down. However, Sydney added 1.42 percent by the end of the day. Hong Kong, Seoul and Taipei were closed for public holidays. Agencies
