US stocks fell to three-week low as weak economic data from China spurred concerns about slowing global growth and lower crude oil prices depressed energy and commodity stocks. China’s Caixin Manufacturing PMI fell for a 14th straight month in April, indicating activity in China’s factories shrank for the 14th month.
The dollar strengthened: according to live dollar index data, the ICE US Dollar Index, a measure of the dollar’s strength against a basket of six rival currencies, rose 0.5% to 93.044 after.
The Dow Jones Industrial Average fell 0.8%, settling at 17750.91, weighed by losses in JP Morgan Chase (NYSE:JPM) and United Technologies (NYSE:UTX) shares, down 2% and 2.3% respectively.
The S&P 500 closed 0.9% lower at 2063.37, with all ten main sectors ending in negative territory, led by 2.2% and 1.7% losses in energy and materials sectors respectively.
The Nasdaq Composite dropped 1.1% while Apple shares (NASDAQ:AAPL) gained 1.6% following losses in eight sessions in a row.
In economic reports, car sales in April were stronger than expected due to cheap credit and low gasoline prices, but carmakers ended lower nevertheless, with General Motors (NYSE:GM) and Ford (NYSE:F) down 1.6% and 1.4% respectively.
Cleveland Fed President Loretta Mester said waiting for markets to calm down before raising interest rates may lead to more volatility, raising concerns the Fed may hike interest rates at its next policy meeting in June.
Recent economic data indicated US economic growth slowed in the first quarter, with inflation declining instead of picking up.
While Federal Reserve may vote to hike the rates in June, central bank policymakers will need evidence that the economy is accelerating. A better than expected jobs report for April, due on Friday, may provide some support for hawks if the report indicates rising wages accompanying solid job growth.
Today at 13:00 CET Mortgage Applications will be released in US. At 14:15 CET April ADP non-farm Employment Change will be released. The tentative outlook is positive for the dollar.
At 14:30 CET March Trade Balance will be released in US. The tentative outlook is positive. At 16:00 CET April ISM Service Index and March Factory Orders will be released. The tentative outlook is positive.
European stocks closed at the lowest level in three weeks as commodity and bank shares sold off following lower oil and earnings reports.
Euro strengthened against the dollar, hitting $1.1618, another record high since August.
The Stoxx Europe 600 fell 1.7%, with basic materials, energy and financial shares leading the decliners.
Germany’s DAX 30 lost 1.9% to 9926.77, as stronger euro hurt prospects for exporters by making their goods more expensive to holders of other currencies. Declining operating profits were another negative factor for BMW (DE:BMWG) shares, which sank 3.8%.
France’s CAC 40 tumbled 1.6%. The UK’s FTSE 100 lost 0.9%, weighed also by unexpected fall in UK Manufacturing PMI to its lowest level in three years.
Today at 10:30 CET May Construction PMI will be released in UK. The tentative outlook is negative for the pound. At 11:00 CET eurozone Retail Sales for March will be released by Eurostat. The tentative outlook is positive.
Asian stocks are falling today, with Chinese shares paring earlier losses after the People’s Bank of China set the value of the yuan at 6.4943 for one US dollar, weakening it 0.59% from the previous day’s fix of 6.4565.
Australian stocks are retreating as commodity shares sold off amid declining oil prices.
Oil futures prices are edging up today as oil output in Canada fell due to production disruption as a wildfire spread near country’s oil sands region. West Texas Intermediate crude oil fell 2.5% to $43.65 a barrel on the New York Mercantile Exchange yesterday as news reports pointed to expectations for higher crude output by OPEC producers.
Today at 16:30 CET US Crude Oil Inventories will be released by the Energy Information Agency. US crude inventories rose by 1.3 million barrels to 539.7 million barrels last week according to the late Tuesday report by American Petroleum Institute, a private industry group.