US stocks sink amid renewed worries Global markets slip into negative territory again
NEW YORK: Wall Street stocks tumbled yesterday as renewed worries about Turkey offset solid US retail sales data. About 30 minutes into trading, the Dow Jones Industrial Average was down 1 percent to 25,019.70. The broad-based S&P 500 fell 1.1 percent to 2,809.07, while the tech-rich Nasdaq Composite Index plummeted 1.4 percent to 7,763.55.
The Turkish lira continued to rally from record lows yesterday, but Ankara hiked tariffs on a spate of US goods in retaliation for American sanctions on Turkey.
US retail sales rose 0.5 percent in July to $507.5 billion, overshooting analyst forecasts, which had called for a token 0.1 percent increase. Among individual stocks, Macy’s slumped 11.2 percent amid disappointment over the department store chain’s forecast. The retailer projected overall annual sales ranging from flat to a 0.7 percent increase compared with fiscal 2017. Constellation Brands dropped 8.8 percent after announcing a $4 billion deal to significantly boost its stake in Canopy Growth, a Canadian cannabis company. US-traded shares of Canopy Growth shot up 28.4 percent. Stock markets falter; ki lira firms
European shares slipped into negative territory yesterday after a doubling by Turkey of tariffs on some US imports soured sentiment and weak commodity prices impacted miners. Bearish Asian markets, a strengthening dollar and a surprise 2 percent fall in Chinese technology giant Tencent Holdings’ earnings also weighed. “In a market highly sensitive to downside sentiment, today’s Tencent result could prove a
fresh catalyst for continued emerging market pressure,” said Douglas Morton from Northern Trust Capital Markets.
At 1330 GMT, the pan-European STOXX 600 was down 1 percent with most major bourses trading lower as Wall Street opened in the red. Auto stocks were among the worst performers, pushing the DAX down to a six-week low after Turkey doubled tariffs on US alcohol, car and tobacco imports. The auto sector was down 1.7 percent, near lows hit when trade war fears gripped markets at the start of July. “The imposition of punitive tariffs on a raft of US imports is hardly indicative of the Turkish authorities being ready to embark on some sensible monetary and fiscal measures to combat the crisis,” said Neil Wilson of markets.com. Miners were down 3.3 percent and at an eight-month low as renewed anxiety over trade piled pressure on a sector already dented by falling copper prices.
Corporate earnings triggered some share price moves: Danish wind turbine maker Vestas jumped 3.9 percent after reporting better-than-expected second-quarter operating profits and launching a 200 million-euro ($227 million) share buy-back. Noting the “sharp margin beat along with stable
pricing,” UBS analysts maintained their “buy” rating on the stock. Also in Denmark, audio equipment maker William Demant fell 9 percent after it published a trading update that Bernstein analysts said lifted its guidance “perhaps less than consensus would have hoped for”.
In the UK, Admiral rose to the top of the FTSE 100 , gaining 3.6 percent, after posting a 9 percent rise in first-half pretax profit. Hikma Pharma posted the best performance by midsized listed firms, up 7.5 percent, after raising its outlook.
Atlantia, which owns Autostrade per l’Italia, was down 5.4 percent after Italy’s transport minister called for senior managers of the company - which operated the bridge that collapsed in Genoa on Tuesday - to resign. Shares in Air France-KLM were up 0.9 percent after reports its board was likely to appoint Air Canada’s chief operating officer, Benjamin Smith, as its new boss. China stocks extended losses yesterday to a third straight day of declines as worries over the country’s cooling economy and the yuan’s descent to a 15-month low knocked investor confidence. The blue-chip CSI300 index fell 2.4 percent to 3,291.98 points, while the Shanghai Composite Index closed down 2.1 percent at 2,723.26 points. The declines follow downbeat economic data reported on Tuesday, which comes as a trade war with the United States threatens to pile more pressure on the world’s second-largest economy.
To support growth, China has rolled out a $14 billion urban railway plan and pushed local governments to speed up issuance of special bonds for funding infrastructure projects.
The yuan weakened to a 15-month low yesterday and flirted with a key support level not seen since 2008 as the dollar extended gains and a raft of data pointed to further slowing in China’s economy. “While the PBOC has propped up the yuan against the US dollar by raising FX risk reserve requirements, the recent plunge in the currencies of some emerging economies (eg. Argentina and Turkey), triggered by debt and geopolitical risks, have adversely affected sentiment,” Gao Ting, Head of China Strategy at UBS Securities, wrote in note.
Sectors retreated across the board, with the CSI300 subindex tracking consumer firms dropping 2.8 percent and the sub-index tracking healthcare firms plunging 3.8 percent.
Both sectors have come under heavy pressure in recent weeks amid a scandal around domestically made vaccines that has undermined broader consumer confidence, as well as heightened worries about the domestic economy and the trade outlook. Leading liquor maker Jiangsu Yanghe Brewery closed down 4.9 percent at a four-month low, while Tonghua Dongbao Pharmaceutical plunged the maximum allowed 10 percent.
China stocks extend rout