Com­modi­ties drop weighs on stocks af­ter China data

The Pak Banker - - BUSINESS -

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.

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