The New York Stock Exchange gave way to pessimism on Friday after the publication of a salvo of disappointing figures for economic activity in China, also in Europe and the United States. The Dow Jones and the S & P 500 have fallen back into the correction zone, with a loss of more than 10% from their last peaks. Investors are now worried about a slower than expected global growth. The trade war between the United States and China seems to have already done damage, while the two largest economic powers are trying to reach an agreement before the end of March to rebalance their trade.
At closing, the Dow Jones index lost 2.02% to 24,100 points, while the broad S & P 500 index ended down 1.91% at 2,599 pts, and the Nasdaq composite index fell 2.26% to 6,910 pts. The three US indices have now faced two bearish weeks. After losses of around 4.5% last week, they posted declines of 1.2% for the DJIA, 1.3% for the S & P 500 and 0.8% for the last five session.
In Europe, the Euro Stoxx 50 yielded 0.63%, while in Paris, the CAC 40 yielded 0.88%. In France, the continuing national protests of the ‘yellow vests’ proved to have considerably disrupted economic activity in December. As a result, activity in the industrial and services sector shrank, according to estimates by British market researcher Markit. Earlier, the Nikkei had lost more than 2% in Tokyo, and the CSI 300 had dropped 1.6% in Shanghai.
The day was marked by a series of disappointing statistics for global growth. In China, industrial production and retail sales were much weaker than expected in November, reflecting the negative impact of Donald Trump’s taxes on Chinese products.
Retail sales rose in China by 8.1% in November on an annual basis, but the savings were expected +8.8% and this is their slowest growth in more than 15 years! As for industrial production, it increased by 5.4% year on year, in October, but the consensus was for +5.9%.
In the US, the disappointment came from December’s PMI index and industrial production in November, both of which were below expectations. In contrast, domestic consumption (which accounts for two-thirds of GDP in the United States) continues to perform well across the Atlantic. Retail sales rose by 0.2% in November, against a consensus of 0.1% and a revised gain of up to +1.1% for the previous month (vs. +0.8% previously estimated).