US stocks ended sharply lower on Tuesday as investor concerns over slowing global growth led to selloff in materials stocks. Investor concerns over global growth outlook intensified after Federal Reserve left the interest rates unchanged last week citing global market turmoil and a slowdown in China. On Monday remarks of central bank policy makers suggested Federal Reserve may still lift interest rates this year if US economy improvement continues. Federal Bank of Atlanta President Dennis Lockhart confirmed on Tuesday his support for interest rate hike this year. Dollar strengthened against major currencies as the ICE US dollar index rose 0.4%. Market participants will be watching closely Janet Yellen’s speech on inflation and monetary policy on Thursday in Massachusetts for additional clues whether the Federal Reserve intends to raise interest rates this year. Investor concerns about slowing growth in China intensified after the Asian Development Bank lowered its forecast for China’s annual growth rate to 6.8% from a previous forecast of 7.2%. The S&P 500 lost 1.2%, with all ten main sectors trading lower led by materials and technology stocks. Markets didn’t react to Federal Housing Finance Agency report which showed US home prices rose a seasonally adjusted 0.6% in July. The trading volume of about 7.3 billion shares on US exchanges was 12% below the daily average for the past 20 trading days. Today at 12:00 CET Mortgage Applications will be released in US. At 14:45 CET preliminary Manufacturing PMI for September will be released by Markit. The tentative outlook is negative. And at 15:30 CET Crude Oil Inventories will be released by the Energy Information Administration. At 17:30 CET FOMC member Lockhart speaks on economy in Georgia.
European stocks slumped on Tuesday on concerns over global growth slowdown. The euro fell to nearly three-week low against the dollar. Volkswagen (XETRA:VOWG) shares sank 19% hitting four-year lows as more countries started investigations of emission compliance of Volkswagen’s diesel cars. Volkswagen (XETRA:VOWG_p) lost one third of its total market capitalization in two-day slump. Other automaker stocks were also hit hard as investors worried about the impact of the scandal after French Finance Minister Michel Sapin called for an investigation of the entire sector in Europe. Peugeot SA (PARIS:PEUP) in France tumbled 8.8%, Daimler (XETRA:DAIGn) lost 7%, BMW (XETRA:BMWG) finished down 6% and Milan-listed shares in Fiat Chrysler (NYSE:FCAU) declined 6.2%. The STOXX 600 index lost 3.1%, suffering its third loss in four sessions.
Chinese stocks fell today after preliminary Caixin and Markit Manufacturing PMI indicated activity in China's factory sector fell for a seventh straight month to six-and-a-half year low of 47.0 in September from a final reading of 47.3 in August. Readings below 50 indicate a contraction. Shanghai Composite Index lost 2.2% as falling manufacturing activity added to concerns China’s economy may be slowing more sharply than previously believed.
Oil futures prices are edging higher after falling earlier following the release of disappointing China PMI report. US oil prices fell on Tuesday as investors worried energy demand will continue falling with global economic slowdown.
Copper prices are also rebounding today after December copper fell 3.8% on Tuesday on Comex exchange in New York on China slowdown concerns. Gold futures prices are moving higher after closing lower for the second session on Tuesday as dollar strengthened. Gold for December delivery settled 0.7% lower, following 0.4% drop on Monday.