China’s slowdown weighs on investors: Morning market insights

The New York Stock Exchange fell victim to the Friday the 13th curse over the weekend as China’s slowdown weighed on investors. This week new US retail sales figures, housing starts and housing sales figures will be released. All are expected to rise slightly.

“Retail sales seem to be holding up well,” said Carl Riccadonna, a senior US economist at Deutsche Bank Securities in New York, told Bloomberg. “It’s sending an important signal that gasoline prices are not yet biting into spending. We’re seeing ongoing income growth.”

“Any kind of data that suggests a slowdown globally, especially in China, where so much of the tech products are getting sold into or manufactured from, brings a lot of nervousness,” Jay Srivatsa, the managing director of equity research at Chardan Capital Markets, said. “We still don’t know if the recovery in the US market is for real or not.”

The S&P500 Index was down 1.25% to 1370.26 overnight. The Dow Jones Industrial Average was down 1.05%, or 136.99 points, to 12849.60. The NASDAQ Index fell 1.45% to 3011.33.

US stocks to watch this week include the world’s largest consumer-products company, Procter & Gamble (PG:US), which has lifted its quarterly dividend to 56.2 cents a share, from 52.5 cents. Another is DuPont (DD) which has five private equity firms forming three teams to bid for its car paint business, according to Reuters. The Delaware-based global chemicals giant developed ground-breaking products such as neoprene, nylon, Teflon and Lycra.

West Texas Intermediate (WTI) oil was down 0.78% to $US102.83 a barrel over the weekend. Gold was down 1.21% to be trading at $US1660.20 an ounce.

The Australian dollar was slightly down over the weekend, buying $US1.03645 at 8am AEST.

Europe

European stock markets dropped the weekend, weighed down by reservations about the European Central Bank’s longer-term refinancing operation (LTRO).

Southern Europe’s heavy debt, high unemployment and lack of growth remains a big problem.

European equities dropped for a fourth week – the longest run of losses since August – with the Europe-wide Stoxx 50 index down 2.6%, Germany down 2.4%, France down 2.4%, Italy down 3.3%, Spain down 3.6% and the UK falling 1%.

For the week Spain’s IBEX index was down 5.3%. It is 15% down for the year.

Germany has been the engine keeping Europe afloat with the Dax up 11.6% this year.

The European Central Bank has disbursed more than 1 trillion euros ($1.3 trillion) to the region’s banks through its LTRO option. That represents more value than the entire Australian economy produces in a year.

“Despite the intervention of the European authorities in the form of the LTRO, concerns have now spread to Spain,” Richard Hunter, the head of equities at Hargreaves Lansdown in London, told Bloomberg. “In the US, last week’s jobs numbers provided a hangover which has been difficult to shake off.”

The London FTSE 100 closed down 1.03% on Friday night to 5651.79.

The German DAX was down 2.36%, or 159.34 points, to 6583.90.

The European Stoxx50 index fell 2.58% to 2291.51.

European banks led the losses last week. Frances’ Societe Generale SA (GLE) and Italy’s UniCredi sank more than 8% as Spain’s Banco Espirito Santo (BES) SA tumbled 13%.

Finland’s Nokia Oyj (NOK1V) slumped 21% after reporting an operating loss for its mobile phone division and forecasting that earnings are unlikely to recover anytime soon. It was once the world’s biggest mobile phone maker but has fallen behind Apple and Samsung over the last few years as smartphones took over the market.