China Weakness Drags Markets Lower

China Weakness Drags Markets Lower

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The week started with a small loss on the global stock markets, after further signs of a slump in Chinese economic growth. Oil prices have fallen, while in the United States, the continuation of the “shutdown” for the fourth week, is feared to cost high, ultimately on the economy. Q4 results season started with those of Citigroup Bank, which were well received, although mixed.

At the close, the Dow Jones index fell 0.36% to 23,909 points while the broad S & P 500 index dropped 0.52% to 2,582 pts, and the Nasdaq composite index, rich in technology and biotechnology stocks, fell 0.94% to 6,905 pts. Last week, the three indices rose by 2.4%, 2.5% and 3.4% respectively.

Earlier, the European index EuroStoxx 50 dropped 0.48%, and the CAC 40 sank 0.39% in Paris, while in the morning, the Chinese index CSI 300 fell 0.87% and Hang Seng lost 1.38% in Hong Kong after the announcement of disappointing figures for Chinese trade.

Beijing’s imports plunged 7.6% in December compared to December 2017, while exports fell 4.4%, a decline stronger than forecast by analysts. The decline in imports reflects the weakness of domestic demand, while exports is the result of customs barriers initiated in 2018 by the United States to Chinese products.

Despite these taxes, exports to the United States increased over the whole of 2018 (+11.3%), while imports advanced by only 0.7%, resulting in a further increase in the trade surplus of the United States. This surplus reached a new record of $323.3 billion against $275.8 billion in 2017, according to data released Monday by Chinese customs.

These fears of a slowdown in Chinese activity, and therefore global growth, have already led to a sharp fall in indices by the end of 2018 and are, according to comments of the US Central Bank chief, Jerome Powell, are, “the main concern” for the institution.

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I handle much of news coverage for tech stocks, and occasionally cover companies in different sectors. In the past, I've written for other financial sites and published independent investment research, primarily on tech companies. I have a B.A. in Economics from Columbia University. I'm based out of San Diego, but grew up in Southern New Jersey. I play basketball and tennis in my spare time, am a long-time (and long-suffering) fan of Philadelphia's sports teams, and alternate daily between using an iPad Air, a Galaxy Note 3, and one or two Windows PCs.

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