By Will Horner and Shen Hong
U.S. stock futures fell after a weaker-than-expected February
jobs report.
S&P 500 futures dropped about 0.9%, adding to their losses
before the U.S. payrolls report published Friday morning.
Global stocks had already slid Friday, as Chinese shares
suffered their worst day since October, after weak export data and
comments from the U.S. ambassador to China that a trade deal wasn't
imminent heightened concerns about the world economy.
The Shanghai Composite Index fell 4.4% and its smaller Shenzhen
counterpart dropped 3.8%, their biggest single-day drops in five
months. Elsewhere in the region, Japan's Nikkei 225 closed 2%
lower, while Korea's Kospi lost 1.3%.
With U.S. stock futures' morning decline, the S&P 500, Dow
Jones Industrial Average and Nasdaq Composite looked to be on
course for a fifth-consecutive day of declines. The S&P 500,
Dow Industrials futures and Nasdaq-100 futures were all lower.
Stocks exposed to China and global trade were likely to fall
when Wall Street opens. U.S.-listed Chinese companies JD.com and
Baidu were 3% and 2.3% lower respectively in premarket trading.
Micron Technologies led declines among semiconductor makers and
other tech companies including Facebook and Microsoft were lower.
Oil companies fell in premarket trading as the price of crude
followed equities sharply lower.
Brent crude, the global benchmark, was down 1.9% at $65.04 a
barrel, while WTI fell to $55.63 a barrel, 1.8% lower.
Investors will also be scrutinizing nonfarm payrolls figures
expected Friday for clues on the health of the world's largest
economy.
In February, Chinese exports were down 20.7% from a year
earlier, official data Friday showed -- a much steeper decline than
economists had expected. Imports tumbled 5.2%, also a bigger drop
than expected.
January and February data are typically distorted by weeklong
Lunar New Year holidays, according to Shuang Ding, chief economist
for greater China and north Asia at Standard Chartered Bank in Hong
Kong. However, the weak figures reminded investors of China's bleak
macroeconomic picture, he said.
Mr. Ding said the market selloff was triggered partly by that
data, as well as the European Central Bank's move and a research
note from China's biggest brokerage advising investors to sell
shares in People's Insurance Company (Group) of China Ltd., one of
the year's top-performing stocks. Mr. Ding said some investors saw
this call, which would probably require official approval, as
suggesting Beijing wanted to stop the stock market from
overheating.
Analysts said another reason investors in China were selling was
to lock in gains after the big run-up of recent weeks. Even after
Friday's selloff, China's domestic benchmark is up 19% in 2019.
In Europe, the Stoxx Europe 600 dropped 0.8% by afternoon trade,
putting it on course for a third consecutive day of declines.
Losses were felt most in the index's autos and parts and basic
resources sectors, which both fell more than 2%.
Plans by the European Central Bank to deploy additional stimulus
helped trigger losses overnight in U.S. and European stocks, since
they suggested policy makers had become increasingly concerned
about the slowdown across the eurozone.
The ECB said Thursday it would hold interest rates months longer
than initially signaled -- at least until the end of 2019 -- and
issued a new batch of cheap long-term loans to banks starting in
September. The central bank also slashed its forecast for gross
domestic product growth for 2019 to 1.1% from 1.7% in December and
cut its inflation projections.
Despite the concerned response from markets, some welcomed the
actions taken by ECB President Mario Draghi as necessary to guard
against a worsening of the global slowdown.
"It seems like Draghi, at least, wanted to be seen as decisive.
Now is better to act, sooner, pre-emptive, rather than later," said
Geoffrey Yu, head of the U.K. investment office of UBS Wealth
Management.
While the ECB's moves showed they were concerned about the
slowdown, their actions should be read as vigilance, rather than
anxiety, he added. "They are erring on the side of caution."
Jim Reid, an analyst at Deutsche Bank, said in a note that
markets interpreted the ECB's stimulus measures as "nowhere near
substantial enough," considering the downward revisions of growth
forecasts.
Investors in Europe were eyeing poor data from Germany that
showed the nation's manufacturing orders plunged 2.6% in January
from December, missing economists' forecasts of 0.5%.
Wall Street closed lower Thursday as growth worries and
lingering questions over the U.S.-China trade dispute weighed on
sentiment. The Dow and S&P 500 both closed down 0.8%.
European investors were taking the cocktail of bad news as a cue
to move back into the safety of government bonds, as the yield on
German bunds fell to 0.058%. The yield on the U.S. benchmark
10-year Treasury note inched up to 2.638% Friday from 2.637% late
Thursday, according to Tradeweb. Yields move inversely to
prices.
Gold rose 0.6% to $1,294 an ounce.
Joanne Chiu contributed to this article.
Write to Shen Hong at hong.shen@wsj.com
(END) Dow Jones Newswires
March 08, 2019 09:24 ET (14:24 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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