World stocks fall as China, US manufacturing slows

05-Feb-2014 Intellasia | AFP | 6:00 AM Print This Post

Global stocks fell on Monday due to signs of weakness in the manufacturing sectors of the US and China, the world’s top two economies, as well as lingering jitters about developing markets.

Market sentiment was hit early by an official Chinese manufacturing survey that showed factory output grew at a slower rate in January compared with December. The report released on the weekend followed a HSBC survey that showed an outright contraction in manufacturing.

The sell-off in stock markets accelerated after an equivalent US survey showed an unexpected drop in January. The ISM index fell to 51.2 points from 56.5 the previous month.

Analysts say that may be due to the extreme cold weather that hit the country, but is nevertheless disappointing for an economy that hopes to be rebounding.

“It is possible that the weather played a role in the unexpectedly sharp drop in the ISM manufacturing index, but we won’t know for sure until we see February’s report,” said Amna Asaf, economist at Capital Economics.

Britain’s FTSE 100 fell 0.7 percent to close at 6,465.66 while France’s CAC-40 dropped 1.4 percent to 4,107.75. Germany’s DAX shed 1.3 percent to 9,186.52.

On Wall Street, the Dow was down 1.3 percent to 15,489.49and the S&P 500 was 1.5 percent lower at 1,756.46.

The Nikkei 225, the barometer for the Tokyo Stock Exchange, closed down 2 percent at 14,619.13 as the yen has reversed some of its weakness against the dollar in recent days, which is a negative for exporting stocks.

Markets were closed in Hong Kong, China, Taiwan and Malaysia for Lunar New Year holidays. Seoul’s Kospi dropped 1.1 percent to 1,919.96. Among the Asian markets open for business, only Thailand posted gains after national elections took place Sunday without major violence. Australia’s S&P/ASX 200 fell less than 0.1 percent.

Investors continued to monitor the financial markets of several developing countries, including Turkey and Argentina, which have been shaken in recent weeks by concerns that growth will slow and money will flow out of their economies as the US Federal Reserve tightens its monetary policy. That has knocked many stock markets, which were ripe for a pullback after big gains in 2013.

In other markets, the benchmark US crude oil contract for March delivery was down 93 cents at $96.56 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 74 cents on Friday.

The euro was up 0.4 percent at $1.3531. The dollar fell 0.9 percent to 101.13 yen, down from about 105 yen at the beginning of the year.


Category: FinanceAsia

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