U.S. Stocks Open Lower as Trade Talks Falter
September 23 2019 - 10:06AM
Dow Jones News
By Caitlin Ostroff
U.S. stocks opened lower Monday amid fading optimism around
U.S.-China trade negotiations as the two countries signaled an
agreement remained out of reach.
The Dow Jones Industrial Average fell 77 points, or 0.3%, to
26858 shortly after the opening bell. The S&P 500 slid 0.2% and
the Nasdaq Composite declined 0.1%.
On Friday, Chinese negotiators abruptly canceled a trip to farms
in Montana and elsewhere. President Trump also rejected suggestions
the U.S. would accept a partial trade agreement with China, saying
his administration is "looking for a complete deal."
"I think this is the case of, well, we had the promise of more
talks but where do we go from here?," said Chris Beauchamp, chief
market analyst at online trading firm IG Group
European stocks were also hit by weaker-than-expected
manufacturing and services data for France, Germany and other
eurozone countries. The euro fell 0.3% against the U.S. dollar, and
the yield on the German 10-year bund dropped as investors reached
for safe government bonds.
The Stoxx Europe 600 fell 0.8% in afternoon trade.
"Germany's in recession. I think that's pretty much a stone-cold
fact," said Claus Vistesen, chief eurozone economist for Pantheon
Macroeconomics. There were also signs that weakness in eurozone
manufacturing was spilling over into services, which will likely
lead to slowing employment and rising unemployment should the trend
continue, he said.
The data make a strong case of the need for countries to enact
fiscal policy, he said. "I think they'll panic. They're going to
send a wall of money our way," Mr. Vistesen said.
Copper prices also took a hit after the German data, falling
0.4%. Germany consumed 1.24 million tons of refined copper in 2018,
according to Wood Mackenzie, or around 5% of global demand. That
makes it the third-largest consumer of refined copper in the world,
behind the U.S. and China.
Shares in airplane and travel companies rose following the
collapse of British travel group Thomas Cook Group after the
company failed to conclude a rescue deal with investors and
creditors, canceling all bookings and forcing U.K. authorities to
help get thousands of vacationers home. Shares in travel company
TUI rose 6.9% and shares in EasyJet gained 3.2%.
Chinese shares fell Monday, amid concerns about the faltering
trade talks. The benchmark Shanghai Composite Index closed nearly
1% lower, while its smaller Shenzhen counterpart fell slightly more
than 1%.
"The farm visit news was certainly a factor but having said
that, investors' expectations for a quick resolution had been
pretty low in the first place," said Zhang Gang, senior analyst at
Central China Securities, saying the declines were relatively
limited by Chinese standards.
Twists and turns on the trade front aside, the Chinese central
bank's decision to hold a key medium-term interest rate steady last
week has continued to weigh on sentiment, Mr. Zhang said. "There
are few signs that the authorities will significantly loosen
monetary policy in the near term," he added.
Brent crude oil slipped to $63.33 a barrel, after Iran freed a
British tanker, ending a monthslong standoff ahead of a United
Nations summit where it faces tough questions over attacks on Saudi
Arabian oil facilities.
The Wall Street Journal reported Sunday that Saudi Arabian Oil
was offering equipment makers and service providers a premium for
parts and repair work as it seeks to restore operations hampered by
an attack on oil facilities earlier this month.
It may take many months -- rather than the maximum 10 weeks
company executives have promised -- to restore operations to full
working order, Saudi officials and oil contractors said.
Hong Kong's Hang Seng fell 0.8% after another weekend of
protests. Japan's Nikkei 225 was closed for a holiday, and Korea's
Kospi was flat.
Indian shares were a bright spot, hitting a two-month high as
the government's measures to prop up sluggish economic growth boost
investor sentiment.
The yield on the 10-Year Treasury fell to 1.702% from 1.754% on
Friday afternoon. Bond prices and yields move in opposite
directions.
Shen Hong and Joseph Wallace contributed to this article.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
(END) Dow Jones Newswires
September 23, 2019 09:51 ET (13:51 GMT)
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