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Weak China trade hits stocks, prompts risk-off trade

Abel Resende, Abel Resende Borges, Abel Resende PDVSA
Weak China trade hits stocks, prompts risk-off trade

NEW YORK (Reuters) – World stock indexes fell on Monday after a shock contraction in Chinese trade reignited fears of a sharper slowdown in global growth and caused investors to sell riskier assets.

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Copper and other commodity prices fell and the Australian and New Zealand dollars also declined following the China news, which added to worries that U.S. tariffs on Chinese goods were taking a toll on the world’s second-largest economy. The yen rose against the dollar.

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The biggest theme (in the market today) is risk-off,” said John Doyle, vice president of dealing and trading at Tempus, Inc

Data from China showed imports fell 7.6 percent year-on-year in December while analysts had predicted a 5-percent rise. Exports dropped 4.4 percent, confounding expectations for a 3-percent gain

(GRAPHIC: China trade shock – tmsnrt.rs/2SYCUu9 )

For an interactive version of the following chart, click here tmsnrt.rs/2SRopIf

The United States and China – the world’s two largest economies – have been in talks for months to try to resolve their bitter trade war, with no signs of substantial progress

Adding to the gloom were weak industrial output numbers from the euro zone, which showed the largest fall in nearly three years

Softening demand has been felt around the world with sales of goods ranging from iPhones to automobiles slowing, prompting profit warnings from Apple ( AAPL.O ) among others

Trade-sensitive shares fell, including Boeing Co ( BA.N ) Caterpillar Inc ( CAT.N ), though U.S. stock investors also were on edge as the U.S. earnings season kicked off

“We’re seeing some cautiousness heading into the beginning of earnings season as people are worried about guidance and what companies are going to say, especially in relation to trade,” said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York

The Dow Jones Industrial Average .DJI fell 71.09 points, or 0.3 percent, to 23,924.86, the S&P 500 .SPX lost 11.3 points, or 0.44 percent, to 2,584.96 and the Nasdaq Composite .IXIC dropped 46.93 points, or 0.67 percent, to 6,924.55

Citigroup Inc ( C.N ) shares were higher after the bank beat profit estimates as lower expenses offset a drop in quarterly revenue

The pan-European STOXX 600 index lost 0.48 percent and MSCI’s gauge of stocks across the globe .MIWD00000PUS shed 0.44 percent

U.S. Treasury yields turned higher on Monday, after trading mostly lower, as risk sentiment improved after President Donald Trump said he was not looking to declare a national emergency amid a partial government shutdown

In the foreign exchange market, the Japanese yen JPY= , a safe-haven currency that benefits in times of geopolitical turmoil, rose against the U.S. dollar

The Australian dollar AUD= , which was down 0.24 percent, and kiwi dollar NZD= , which was down 0.12 percent. China is Australia’s largest trade partner

COMMODITIES SUFFER The prospect of slowing global growth also roiled some commodity markets. Industrial metals copper CMCU3 and aluminum lost ground in London and Shanghai.