On 01 February, 2016 – China’s data drags global markets lower
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On 01 February, 2016 – China’s data drags global markets lower

February 2, 2016
|In Global Round Ups
|By Jesmond Mizzi Financial Advisors

However, the US recovered losses to finish virtually flat. 
United States
Stocks recovered from an early slide after investors seemed to be able look past another steep drop in the price of oil and renewed concerns about economic growth in China and the U.S. The Dow Jones industrials slipped 0.1 percent while Nasdaq edged up 0.1 percent. The S&P was virtually unchanged (down 17.12 points).
Energy stocks fell in tandem with oil and gas prices. Southwestern Energy, Transocean and Chesapeake Energy retreated. Chipotle Mexican Grill shares advanced after news reports said federal regulators planned to declare the E. coli outbreak at the restaurant chain to be over. Twitter was up after reports that the company was in talks with private equity firms about a possible acquisition or investment. Alere jumped after Abbott Laboratories announced it was purchasing Alere, a health care company focused on diagnostics, for $5.8 billion. Abbot shares however declined.
In economic news, US factory activity contracted for the fourth straight month in January according to the Institute for Supply Management. Consumer spending, which accounts for more than two-thirds of US economic output, was flat in December from a month earlier.
In a speech earlier today, Fed Vice Chairman Stanley Fischer said market turbulence’s impact on US growth will factor into the FOMC’s policy decision. Fischer’s dovish comments added to optimism among investors. They have recently been emboldened by signals from European and Japanese central banks that they stand ready to do what is needed to spur growth.
Standard & Poor’s cut Royal Dutch Shell’s credit rating on Monday and warned of a “significant likelihood” it will cut the ratings of several other European oil majors, as a result of “meaningful declines” in the price of oil and gas. S&P also put the ratings of companies including BP, Eni, Repsol, Statoil and Total on watch for a potential downgrade.
Google parent Alphabet reported a 17.8 percent increase in quarterly revenue, boosted by strong sales of advertising on mobile devices and YouTube. The company, announcing its first results under a new reporting structure aimed at improving transparency, said consolidated revenue jumped to $21.33 billion in the three months ended December 31, from $18.10 billion a year earlier. Net income in the fourth quarter rose to $4.92 billion or $7.06 per Class A and B share and Class C capital stock from $4.68 billion or $6.79 per share.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$14.70 to US$1,126.50. Copper futures were down 0.6 percent to US$2.06. WTI spot crude was down US$2.14 to US$31.48. Dated Brent spot crude was down US$1.84 to US$34.15. The US dollar was up against the euro, pound, Swiss franc and the Canadian and Australian dollars. It was unchanged against the yen. The Dollar Index was down 0.7 percent. The yield on US Treasury 30 year bond was up 3 basis points to 2.77 percent while the yield on the 10 year note was up 4 basis points to 1.96 percent.
Europe
European markets declined after rallying at the end of the prior week thanks to then retreating oil prices and renewed concerns over China’s growth. The FTSE and DAX were down 0.4 percent, the CAC dropped 0.6 percent and the SMI edged down 0.1 percent.
Disappointing Chinese manufacturing data spooked investors and caused oil prices to turn lower. Chinese manufacturers signaled deterioration in operating conditions at the start of 2016. The CFLP indicated that the manufacturing sector contraction picked up speed with a reading of 49.4, down from 49.7 in December. The Caixin manufacturing PMI edged up to 48.4 in January from 48.2 in December.
Dialog Semiconductor advanced after it said that it is eyeing new acquisition targets to spur growth. Sartorius climbed after updating its medium term forecast. Automakers BMW, Daimler and Volkswagen finished lower. In Paris, Total was down but Technip gained. Vivendi and LafargeHolcim weakened. In London, HSBC Holdings dropped on a report it will impose a hiring and pay freeze globally in 2016 as part of its drive to cut as much as $5 billion in costs by the end of 2017. Rolls-Royce Holdings finished unchanged despite winning a $2.7 billion order for Trent 1000 engines. BT Group climbed 1 after the company delivered a strong performance in the final quarter of 2015 and announced a new organizational structure. Ryanair Holdings jumped after strong third-quarter earnings. BP and Royal Dutch Shell tracked weaker oil prices lower after broker downgrades. Among miners, Rio Tinto, Glencore and Anglo American retreated.
The euro area manufacturing sector growth slowed as estimated in January with rates of expansion in output, new orders and new export business all easing. The final manufacturing PMI declined to 52.3 in January from 53.2 in December. British manufacturing growth quickened to the strongest level in three months. The manufacturing PMI climbed to 52.9 from 52.1 in December.
Asia Pacific
Asian shares pared early gains to end mixed as oil prices declined after last week’s sharp rally and a slew of data painted a mixed picture of the Chinese economy. While shares in Australia, Japan and South Korea gained further ground after the Bank of Japan’ shock adopted negative interest rates last week, Chinese shares succumbed to selling pressure after sluggish data and PetroChina’s profit warning.
The Shanghai Composite lost 1.8 percent after China’s official manufacturing PMI reading was 49.4, slightly down from December’s 49.7 reading while growth in the services sector activity slowed from the previous month. The Caixin China manufacturing PMI, a private gauge of nationwide factory activity, edged up to 48.4 from 48.2 in December, offering some respite to investors worried over slowing growth. The Hang Seng was down 0.4 percent.
The Nikkei added 2.0 percent to a near one month high, as a weaker yen supported exporters and realty stocks extended Friday’s strong gains. Mitsui Fudosan and Sumitomo Realty jumped. Sony rallied after the electronics giant reported better than expected quarterly earnings. Automakers Honda, Toyota and Nissan advanced. Sharp gained after Taiwan’s Hon Hai Precision Industry said that it was confident of its offer for the troubled electronics maker. Banks including Mitsubishi UFJ, Mizuho Financial and Sumitomo Mitsui Financial retreated.
The S&P/ASX added 0.8 percent while the All Ordinaries was 0.7 percent higher led by gains in financial and energy stocks. The Kospi was up 0.7 percent on higher stimulus hopes after exports shrank to nearly a seven-year low in January. The Sensex edged 0.2 percent lower.
Global Stock Markets

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
The Reserve Banks of Australia and India announce their respective monetary policy decisions. Germany posts January unemployment rate while the Eurozone releases its December unemployment rate.
*Note — all releases are listed in local time.