Commodities drop weighs on stocks after China data
Metals and oil prices declined with currencies of commodity-producing nations and stocks fell after a gauge of Chinese manufacturing missed economists' estimates.
China's equities extended their worst monthly rout since 2008 after the official purchasing managers index for manufacturing dropped to a threeyear low. Crude halted the longest winning run this year and copper erased some of the previous two weeks' gains, while South Africa's rand led declines among developed nations' currencies. Stocks fell in Europe along with U.S. equity-index futures. Gains in bonds around the world sent yields to the lowest in a year.
China's stocks slid 23 percent in January and the nation's manufacturing sector faces challenges as the government plans to reduce excess indus- trial capacity, while a weakening currency is spurring capital outflows. The slump jolted markets in the first two weeks of the year, before policy makers stepped in to take the sting out of the selloff that erased more than $5 trillion in market value. The Bank of Japan surprised investors Friday by following the European Central Bank in imposing negative rates in a bid to revive lending.
"Even the smallest macro event or data-point can tip sentiment either way," said Daniel Murray, Londonbased head of research at EFG Asset Management. "Markets don't know where to look for support." West Texas Intermediate oil futures dropped 1.6 percent to $33.09 a barrel at 10:28 a.m. in London, ending a four-day rally, while copper was down 1.1 percent at $4,510.50 a metric ton. The Stoxx Europe 600 Index declined 0.4 percent and futures on the Standard & Poor's 500 Index fell 0.5 percent.
The Bloomberg Commodity Index fell one percent, having climbed 2.6 percent last week, the most since October. Aluminum was 0.6 percent lower at $1,509.50 a ton, and industrial precious metals platinum and palladium were also lower. U.S. natural gas futures fell 4.2 percent. Gold climbed 0.3 percent to $1,121.83 an ounce on haven demand.
China's purchasing managers index dropped to 49.4 in January, the National Bureau of Statistics said Monday. That compared with a median estimate of 49.6 in a Bloomberg survey of economists. The Caixin China Manufacturing PMI rose to 48.4 last month from 48.2 in December. Numbers below 50 indicate contraction.
The official manufacturing gauge's six months below 50 is the longest stretch of readings below that level in NBS data since the start of 2005. The PMI slumped last month because of weak demand and efforts to reduce overcapacity, NBS said in a statement Monday. Indicators for new export orders and imports also decreased from a month earlier.
Nokia Oyj dragged a measure of technology stocks to the worst performance of the 19 industry groups on the Stoxx 600, tumbling 11 percent after investors were disappointed by a court decision in a patent dispute with Samsung Electronics Co. Energy-related shares were also among the worst performers as the price of oil slid, with service provider Seadrill Ltd. leading declines.
Luxottica Group SpA fell 8.7 percent after quarterly sales missed analysts' projections. The maker of Ray-Ban eyeglasses also said its coChief Executive Officer resigned. BT Group Plc rose 2.5 percent after quar- terly profit beat estimates. Ryanair Holdings Plc gained 3.3 percent after forecasting fourth-quarter traffic will grow more than previously expected and saying it will return 800 million euros ($868 million) to investors via a share-buyback program.
The Shanghai Composite Index slid 1.8 percent, extending declines after its worst monthly selloff since October 2008. The Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong fell 1.2 percent on Monday.
The People's Bank of China auctioned 10 billion yuan ($1.5 billion) of reverse-repurchase agreements on Monday, after using the contracts to inject a net 1.235 trillion yuan in January, the most on record. The seven-day repurchase rate rose 16 basis points to 2.43 percent, while the 14-day rate fell one basis point to 2.81 percent.