US stocks tumbled on Monday as investor confidence was undermined by evidence of slowing economic growth in China and uncertainty when the Federal Reserve will hike interest rates. The dollar weakened, the ICE US Dollar Index, a measure of the dollar’s strength against a basket of six currencies, fell 0.2%. Investor concern was spurred by data showing profits of China’s industrial companies fell 8.8% in August from a year earlier, the biggest decline since 2011.
S&P 500 fell 2.6%, retreating for a fifth consecutive session and hitting the lowest level since August 25 when global equities rout started after China devalued its currency. All ten sectors finished in negative territory led by health-care sector.
NASDAQ Biotechnology Index slumped 6% as biotechnology stocks extended last week’s losses after Democratic presidential candidate Hillary Clinton unveiled a plan to limit monthly out-of-pocket costs for prescription drugs to $250. On Monday she suggested that large drug makers should help increase competition among generic drugs by investing in their production when there is only one manufacturer.
Economic reports showed pending home sales fell 1.4% in August to lowest level in five months. Federal Reserve’s closely watched measure of inflation, the so-called Personal Consumption Expenditure Price Index was unchanged in August rising 0.3% year over year, well below the central bank’s target 2% level. Chicago Fed President Charles Evans said the Fed should be in no hurry to raise interest rates, advocating waiting for the start of rate liftoff until mid-2016. Trading volume was about 8.4 billion shares on US exchanges, 15% above the three-month average.
Stock index futures are rising currently.Today at 15:00 CET July Case-Shiller Composite Index will be released. The tentative outlook is positive. At 15:00 CET September Consumer Confidence will be published by Conference Board. The tentative outlook is negative.
European stocks slumped on Monday as market sentiment was hurt by concern over slowing global growth and car stocks continued falling in the wake of Volkswagen (OTC:VLKPY) (XETRA:VOWG) emission scandal. Euro strengthened against the dollar. STOXX 600 index dropped 2.2%, Volkswagen slumped 7.5% after German prosecutors opened a fraud investigation into former CEO Martin Winterkorn, Daimler (OTC:DDAIY) lost 3.2% and BMW (XETRA:BMWG) fell 2.9% weighing on German DAX 30 which closed down 2.1%.
Commodities trader and mining giant Glencore (OTC:GLNCY) (LONDON:GLEN) plunged 29% on concern interest payments from heavy debt load will wipe out company’s equity value if commodity rout continues. Today at 10:00 CET September Business Confidence, Economic and Industrial Sentiment will be released in eurozone. The tentative outlook is negative. At 13:00 CET preliminary consumer price index for September will be released in Germany. The tentative outlook is negative. And at 20:40 CET Bank of England Governor Carney will speak in London.
Nikkei slumped today 4.1% and turned negative for the year on back of global slowdown concern as the yen strengthened on higher haven demand. Shipping stocks were hit hardest after news a midsize shipping company was expected to file for bankruptcy. Tomorrow at 0:50 CET preliminary August retail sales will be released in Japan. The tentative outlook is negative.
Oil futures prices are rising today on expectations of a weekly drawdown of over one million barrels at Cushing, Oklahoma, indicating a tightening US market. Official data will be released tomorrow.
Gold is falling today after closing 1.2% lower on Monday, the biggest daily drop in three weeks.