China fears influence Wall Street retreat: Morning market insights

Wall Street

The New York Stock Exchange retreated overnight after making advances of last week. Concerns about China’s slowing growth were at the top of investors’ minds even with the US economy showing steady signs of a sustained recovery.

“A Chinese slowdown is inevitable,” Peter Jankovskis, who helps manage about $US2.9 billion at Oakbrook Investments in Illinois, told Bloomberg.

“It’s possible that it will take some of the heat out of commodities as they are the driver of demand. Yet China is not the only growth story out there. China will continue to be an important player, but the US economy seems to have found its legs.”

The S&P500 Index was down 0.30% or 4.23 points to 1405.52. The Dow Jones Industrial Average  finished down 0.52% to 13170.20

The NASDAQ Index dropped 0.14% to 3074.15.

The West Texas Intermediate (WTI) oil price was down 2.04% to $US106.34 a barrel overnight.

Gold also fell 1.03% to be trading at $US1650.34 an ounce.

The Australian dollar was down overnight, and was buying $US1.0481 at 8am AEST after BHP said iron ore sales to China were slowing.

Europe

European stocks fell more than 1% overnight; the biggest retreat for weeks after bad news from China put a dampener on last week’s rally. Car makers BMW, Volkswagen and Daimler led the retreat on news China’s demand for new cars is shrinking.

The London FTSE 100 closed down 1.17% or 69.70 points to 5891.41. The German DAX fell 1.39% or 99.28 points to 7054.94.

The European Stoxx50 index was down 1.22% or 31.81 points to 2576.61.

German car companies retreat

Bloomberg reported that an official at the Chinese government’s Association of Automobile Manufacturers told a conference that vehicle sales forecasts in China may not be met this year because of a ‘difficult’ economy.

Several European car companies fell heavily immediately after the opening bell. BMW was down 4.51% in the first hour to 68.83 euros, Volkswagen fell 5.26%  to finish at 121.88 euros, Daimler fell 4.01% to finish at 45.285 euros and France’s Renault dropped 3.37% to 40.15 euros.

US car giant General Motors, which manufactures cars in Europe under the Opel brand, losing more than $US700 million last year, told analysts yesterday that Europe was “clearly a deteriorating environment”.