Wall Street moved mostly lower during trading on Monday. The weakness on Wall Street was partly due to profit taking, with some traders cashing in on the recent strength in the markets. Worries about the outlook for interest rate increases also weighed on the markets following last Thursday are much better than expected jobs data. Meanwhile, European markets ended the day sharply lower after some surprisingly weak German economic data. After last week’s market action traders seem a bit worn out and are sitting tight ahead of the FOMC minutes due this week and the FOMC rate decision due at the end of the month. Last week’s stronger-than-expected jobs report could add to expectations that the Fed will raise rates sooner than expected. Still, there are enough items in the report, including wage growth, that aren’t yet strong enough to rush the Fed.
European economic data showed that German production fell by 1.8 per cent in May, the biggest reduction in two years and well below market expectations. European shares fell on Monday in response to the weak German economic data. The FTSE Eurofirst 300 index fell by 0.9 percent; the German DAX lost 1 per cent while the UK FTSE fell by 0.6 per cent. Dismal data from the eurozone is likely to reaffirm the European Central Bank’s currently dovish policy stance. Last week, the ECB council kept its main lending rate at 0.15 per cent and maintained a -0.1 per cent rate on bank funds deposited with the central bank.
Hong Kong stocks slipped in choppy trading early Tuesday after U.S. markets offered a weak lead. The Hang Seng Index inched down 0.1%, while the Shanghai Composite Index dropped 0.3%. China Binary Sale Technology Ltd., a Chinese online-transaction service provider, climbed 2.8%, after the company signed agreements with U.S. payment company PayPal and bitcoin payment-service platform PayYard to expand its client base in overseas markets. Meanwhile, leading Chinese computer maker Lenovo Group Ltd. extended gains by 3.3% as investors still cheered the news that Chinese authorities had given the green light to its proposed $2.3 billion purchase of IBM Corp.’s lower-end server business.
Australian shares are trading weaker Tuesday morning, though off their early lows, with the S&P/ASX 200 showing a loss of 0.2%. A retreat for stocks across Europe and the U.S. is weighing on the majority of the financials, with Australia & New Zealand Banking Group and Macquarie Group Ltd. each down 0.5%, and National Australia Bank Ltd. down 0.7%. Further losses for spot iron ore are dragging on some miners.
The Nikkei Stock Average is down 0.8% in early moves, expanding on the previous session’s 0.4% drop as the yen strengthens and after overnight losses for stocks in Europe and the U.S. Among the top-declining blue chips, Sony Corp. (NYSE:SNE). is down 1%,Kawasaki Heavy Industries, Ltd. (TOKYO:7012) is down 1.2%. Kyodo News cites unnamed sources as saying automaker will hike prices in emerging markets where currencies had recently risen against the yen.