Wall St lower after weak Chinese trade data

The ASX is set for a modestly positive open after weak Chinese trade data worried investors in the US and Asia.

Investors around the world were rattled after the release of weak Chinese trade data. Picture: Spencer Platt/Getty Images/AFP.

US stocks closed slightly lower overnight, nearly recovering from an earlier 184-point drop in the Dow that followed weak Chinese trade data.

In Europe, investors were also rattled by worries over the health of the Chinese economy, with share markets in Britain, France and Germany closing lower.

The Australian share market is set for a modestly positive open, with ASX futures up seven points at 7.15am (AEDT).

Official data released Thursday showed Chinese exports fell 10 per cent year-over-year last month, sparking concerns about the world’s second-largest economy and global demand. Stocks around the globe fell and base metals such as copper tumbled. Investors moved to safe havens such as gold, US government bonds and utility stocks.

The yen strengthened while Asian shares mostly declined after the data as the figures came in well below economists’ expectations. The Stoxx Europe 600 fell 0.9 per cent after a downbeat session in Asia.

The Dow industrials declined 45 points, or 0.3 per cent, to 18099. Stocks pared losses in afternoon trading, which some fund managers and traders attributed to investors stepping in to buy the dip.

Material and energy stocks were among the biggest decliners in the US on fears that weakness in China could damp demand for energy and raw materials.

The S & P 500’s materials sector fell 0.5 per cent, while the energy sector declined 0.7 per cent. The S & P 500 dropped 0.3 per cent, and the Nasdaq Composite lost 0.5 per cent.

Havens gained, with utilities in the S & P 500 up 1.3 per cent. Gold rose 0.3 per cent to $US1,255.00 an ounce, while the yield on the 10-year US Treasury note fell to 1.739 per cent from 1.778 per cent on Wednesday.

Big banks posted steep losses Thursday, with the KBW Nasdaq Bank Index falling 1.9 per cent. Slowing growth in China could decelerate the US Federal Reserve’s plans for future interest-rate increases, some traders said, which may be a reason for Thursday’s drop. In September 2015, the Fed didn’t raise interest rates, as many investors had previously expected them to do, after market turbulence related to China.

“China slowing has people worried,” said Justin Wiggs, managing director in equity trading at Stifel Nicolaus. While most investors and traders expect the Fed to raise rates by December, there is some worry that this may disrupt the future pace for Fed rate raises, he added.

Wells Fargo fell 1.3 per cent after the bank said Chairman and Chief Executive John Stumpf would step down from both roles immediately.

Earnings season for big US banks will begin Friday with reports from J.P. Morgan Chase, Citigroup and Wells Fargo.

Bank shares in Europe also declined Thursday, with the broader Euro Stoxx Banks index down 2.6 per cent.

London-traded shares of Unilever and Tesco declined 3.4 per cent and 3 per cent, respectively, after Britain’s largest grocer pulled Unilever’s products from its online shopping site due to a dispute over pricing following a steep decline in the pound.

The British pound steadied Thursday and was last up 0.1 per cent at $US1.2205.

Earlier, shares in Asia were mostly lower following the downbeat Chinese trade data, with Hong Kong’s Hang Seng shedding 1.6 per cent.

The Thai stock market has fallen about 6 per cent this week. After markets closed, news broke that Thailand’s King Bhumibol Adulyadej, the world’s longest-serving monarch, died , heralding a potential new bout of instability.

Japan’s Nikkei Stock Average fell 0.4 per cent. The dollar was down 0.6 per cent against the yen at Yen103.6180 after the downbeat Chinese data triggered a flight to safety.

In commodities, US-traded crude oil inched up 0.5 per cent to $US50.44 a barrel, while copper futures fell 1.6 per cent to $US4,728 a metric ton, dragging down shares of commodity-sensitive companies such as miners.

The WSJ Dollar Index swung between small gains and losses and was last down 0.1 per cent. The dollar had gained for three days as expectations grew for higher US interest rates this year.

Dow Jones