China concern, Italy uncertainty weigh on stocks
NEW YORK |
The euro retreated after last week's weak manufacturing data increased expectations the European Central Bank could cut interest rates to boost the region's economy.
Currency markets were also looking ahead to rate-setting meetings being held by central banks in Japan, Canada and Australia as evidence mounts of weaker global growth.
On Sunday, China reported that its services sector expanded at the slowest pace in five months in February, and factory growth also cooled to multi-month lows. The government could increase downpayments and loan rates for buyers of second homes in cities where prices are rising too quickly.
Worries about global economic growth prompted investors to step back from U.S. equities, and Wall Street opened slightly lower.
"There's still a lot of uncertainty, but it doesn't seem like the weakness has any follow-through because there's a lot of people that have underperformed or are underinvested and jump in on any kind of weakness," said Alan Lancz, president at Alan B. Lancz & Associates in Toledo, Ohio.
The Dow Jones industrial average .DJI fell 46.32 points or 0.33 percent, to 14,043.34, the S&P 500 .SPX lost 2.83 points or 0.19 percent, to 1,515.37 and the Nasdaq Composite .IXIC dropped 5.97 points or 0.19 percent, to 3,163.77.
The less optimistic economic outlook sent MSCI's world equity index .MIWD00000PUS down around 0.3 percent. European shares .FTEU3 were 0.2 percent lower dragged by a 2.1 percent fall in mining stocks .SXPP, which are highly exposed to change in the growth outlook. .EU
A lack of progress in talks to form a new Italian government after last week's inconclusive elections weighed most on the country's stocks .FTMIB and bonds, with 10-year bond yields up three basis points at 4.846 percent.
Analysts said the decline would have been steeper but for European Central Bank's promise to support struggling nations but there remained doubts over how this could be implemented without a government able to enact tough reforms.
Rising expectations that euro zone economic worries could prompt the ECB to cut interest rates sooner than previously anticipated weighed on the euro.
The single currency was down 0.1 percent at around $1.3007, just above Friday's 11-week low of $1.2966.
"There has been increased talk of an ECB rate cut, with at least one investment house predicting it," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman. "We are less sanguine. While the economic data has been soft, the ECB had anticipated weakness early in the year."
Despite the apparent run from risk on the day, U.S. Treasury debt prices edged lower as investors weighed recent price gains against the Italian uncertainty and Chinese growth concerns.
Treasuries could likely stay range bound for much of the week as markets await a European Central Bank meeting on Thursday and key U.S. jobs data on Friday.
"The market's a bit expensive to really go 'gung-ho' and buy at this point even though there's a lot of risk," said Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco.
The 10-year U.S. Treasury note dipped 3/32 in price to yield 1.8549 percent, after earlier hitting a fresh 6-week low of 1.827.
(Reporting by Leah Schnurr, Luciana Lopez and Nick Olivari; Editing by Theodore d'Afflisio)
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Comments (2)
gee.la wrote:
Asia stock markets have already
been overvalued in a large scale. Most of the economies have a worse
future that the stock markets are showing off. I estimate in the next 12
months most of the markets will lose quite a lot of value- 20%-40%. The
stock prices will be much lower than their current prices, particularly
in Hong Kong and main land. The countries in western world are
gradually pushed into austerity actively or passively, although their
stock markets still have potential, but this widespread austerity is a
very bad sign to Asian stock markets. I think things will be a lot worse
from Thailand to Korea, from China to Singapore. The major market of
China is also keeping going down and this limits many demands that were
already planed. So overcapacity keeps eating up the profits of all kinds
of business in Asia. In short, the hot markets, such as the real estate
in Hong Kong and Beijing is a bad signal. The cooling markets, such as
the retailing and manufacturing, is a bad signal, too. In general,
nothing is good. So nothing is good to commodities, from oil to gold,
from coal to copper, either. Even the grain market is suspicious.
mountainrose wrote:
its called deflation precursor to hyperinflation
