Markets Right Now: Stocks sink on China slowdown fears

Friday, 01 Feb, 2019

3M, a bellwether company with operations ranging from health-care supplies to consumer electronics to industrial products, generates more than half of its sales outside the U.S. Shares rose 3 per cent to US$199 before regular trading in NY.

The Philadelphia semiconductor index fell 2.1%, while the S&P technology index dropped 1.8%. Nvidia plunged 14 percent after slashing its revenue forecast.

The continued drama surrounding trade talks between the United States and China could also complicate matters for Caterpillar.

The South Korean company has been losing share for its smartphones for years in China, but the slowdown there is now threatening to hurt its crucial chips business. The Dow Jones Industrial Average sank nearly 400 points, with all 30 members in the red.

In North America, Caterpillar's construction industry sales increased 17% in the fourth quarter over a year earlier due to higher demand for new equipment, primarily to support oil and gas activities and non-residential building construction. The Dow was led lower by shares of Caterpillar.

Wall Street is keyed in on China and how its slowing economy will play out for companies ranging from Caterpillar to Apple.

Offering some relief to investors, the Federal Reserve is expected to leave interest rates unchanged at its two-day policy meeting starting Tuesday.

The S&P 500 index fell 20.91 points, or 0.8 per cent, to 2,643.85. Amazon.com Inc, Apple Inc and Microsoft Corp - all set to report later this week - were down more than 1 percent each, dragging down the S&P 500 and the Nasdaq.

"China's growth slowdown could be faster than expected especially if trade tensions continue, and this can trigger abrupt sell-offs in financial and commodity markets" - something that happened when Chinese growth sputtered in 2015, said International Monetary Fund chief economist Gita Gopinath last week.

The beginning of the week started with investors displaying a weak sentiment towards the futures market as the U.S Stock Index Futures shows a downward trend. "North America is obviously the major market".

Equity markets have solid underpinnings with fourth-quarter earnings looking good, a likely truce in the U.S.

"But the complication of volatility being uncomfortable and the fact we're later cycle, that's why we're seeing these larger reactions to market news than we're used to", she said.

ENERGY: U.S. crude oil fell 3 per cent to $52.07 per barrel in NY.

Crude oil prices tumbled 3% overnight on rising concerns of a demand slowdown from China and evidence of increasing USA oil output, which inhibits the oil market from reaching a supply-demand balance.

In FX markets, the ICE index that tracks the dollar versus the euro, yen, sterling and three other currencies was down 0.05 percent at 95.745.

GrubHub Inc rose 2.6 percent after brokerage Credit Suisse upgraded shares of the online food delivery platform, saying its recent investments will soon pay off. Profit for the year was $10.26 per share, compared $1.26 in 2017.