Wall Street drops 2% on U.S. growth concerns

© Reuters. Traders work on the floor at the NYSE in New York © Reuters. Traders work on the floor at the NYSE in New York

By Medha Singh and Arjun Panchadar

(Reuters) – Wall Street’s main indexes were on course for their sharpest drop in nearly six weeks on Wednesday as a clutch of recent data, including a report on private sector hiring, suggested that trade tensions were taking a toll on the U.S. economy.

All the 11 major S&P sectors were in the red, with technology shares () taking the biggest hit after tumbling 2.4%. Sectors, including industrial (), materials (), energy () and financials (), also shed more than 2%.

The ADP (NASDAQ:) National Employment Report showed private payrolls growth in August was not as strong as previously estimated, and said “businesses have turned more cautious in their hiring,” with small enterprises becoming “especially hesitant.”

The report comes a day after U.S. factory activity contracted to its lowest level in more than a decade, triggering sharp falls in U.S. stocks indexes.

The recent set of weak data has shaken investor faith in the strength of the domestic economy, which had shown relative resilience in the face of slowing global growth and was a key reason for a rally in the benchmark index this year.

“People have been anticipating a bear market for years and they are very anxious and so any number like the ADP number is amplified in the volatility on the downside,” said Tom Plumb, chief investment officer at Plumb Funds in Madison, Wisconsin.

The focus is now on the Labor Department’s more comprehensive jobs report due on Friday for further clues on the health of the U.S. economy.

“The hardest part to figure out is whether trade and the business recession will impact consumer confidence and that leads to a very different scenario,” said Phil Blancato, chief executive officer of Ladenburg Thalmann Asset Management in New York. “So far it hasn’t happened … the consumer has held up.”

The S&P 500 () and the Dow () slipped below their 100-day moving averages for the first time in about a month on Wednesday, seen as a strong technical support level that could presage further losses.

Graphic: Wall Street’s main indexes hit 1-month lows – https://fingfx.thomsonreuters.com/gfx/buzzifr/14/7661/7661/SPX.png

The benchmark index is now about 5% below its all-time high hit in July, after coming within striking distance of the mark two weeks ago.

At 13:02 ET (1702 GMT), the Dow Jones Industrial Average () was down 563.16 points, or 2.12%, at 26,009.88 and the S&P 500 () was down 61.04 points, or 2.08%, at 2,879.21. The Nasdaq Composite () was down 152.02 points, or 1.92%, at 7,756.66.

The Cboe Volatility Index, or VIX (), an options-based gauge of investor anxiety, rose 2.50 points to 21.06, its highest in about a month.

Activision Blizzard Inc (O:) dropped 3.3% after Bernstein downgraded the videogame maker’s shares to “market perform”.

Ford Motor Co (N:) shares fell 4.3% after the carmaker reported a fall of about 5% in U.S. auto sales for the third quarter. Shares of General Motors Co (N:) dipped 4.3% ahead of its quarterly auto sales report.

Among bright spots, homebuilder Lennar Corp (N:) rose 2.4% after the company reported a better-than-expected profit as cheaper mortgage rates led to higher demand for its homes.

Johnson & Johnson (N:) gained 1.2% after the drugmaker said it will pay $ 20.4 million to settle claims by two Ohio counties, allowing it to avoid an upcoming federal trial seeking to hold the industry responsible for the nation’s opioid epidemic.

Declining issues outnumbered advancers for a 4.61-to-1 ratio on the NYSE and a 3.22-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and 12 new lows, while the Nasdaq recorded four new highs and 167 new lows.

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Forex – Dollar Holds Steady on Trade Hopes, But Growth Fears Weigh

© Reuters.  © Reuters.

Investing.com – The U.S. dollar remained broadly supported on Tuesday after U.S. Treasury Secretary Steven Mnuchin confirmed U.S.-China trade talks will resume next month, but concerns about slowing global growth continued to weigh on market sentiment.

Against a basket of currencies the edged up to 98.28 by 2:37 AM ET (6:37GMT).

“The U.S. dollar is rising by default rather than anything U.S.-specific,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney, adding that volumes were low as traders mostly kept to the sidelines waiting for news.

“Trade is never far from the markets’ radar, but I think currency markets are increasingly expecting (U.S-China tensions) to be protracted, I think optimism has dissipated.”

Mnuchin said Monday that trade discussions were scheduled in two weeks and that he and U.S. Trade Representative Robert Lighthizer would meet Chinese Vice Premier Liu He.

The dollar was little changed against the at 107.53, while the was trading at 1.0992, not far from a 28-month low of 1.0926 touched earlier this month.

The single currency fell 0.2% on Monday after data showing that a German manufacturing recession deepened unexpectedly in September and growth in the service sector lost momentum, adding to worries over the outlook for the wider Eurozone.

The was hovering near one-week lows at 1.2435 ahead of a U.K. Supreme Court ruling on whether Prime Minister Boris Johnson acted unlawfully when he suspended parliament just weeks before Brexit.

The outcome of the case could have implications for Johnson’s plans to pull the U.K. out of the European Union on Oct. 31.

The Australian and New Zealand dollars were steady ahead of a speech by Reserve Bank of Australia Governor Phil Lowe, with the market expecting a dovish tone after weak jobs data last week underlined expectations for a rate cut.

Both currencies sat near three-week lows, with the at 0.6774 and the at 0.6295.

“We think Lowe will provide a strong signal that the RBA is ready to cut rates again, endorsing our view for a 25bp cut in October,” said Tapas Strickland, a director of economics and markets at National Australia Bank in Sydney.

“Any comments on the scope for unconventional policy will also be critical for the market.”

–Reuters contributed to this report

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Nigeria Holds Key Rate as Economic Growth Remains Sluggish

© Reuters.  Nigeria Holds Key Rate as Economic Growth Remains Sluggish © Reuters. Nigeria Holds Key Rate as Economic Growth Remains Sluggish

(Bloomberg) — Nigeria’s central bank held its benchmark rate for a third straight meeting as economic growth in the West African nation remains sluggish.

All nine members of the Monetary Policy Committee who attended the meeting voted to keep the rate at 13.5%, Governor Godwin Emefiele told reporters Friday in the capital, Abuja.

Key Insights

  • The central bank is caught between inflation that’s been above the target range for more than four years and an economy that’s still struggling to recover from a contraction in 2016. Growth in gross domestic product was lower than forecast and slowed for the second consecutive quarter in the three months through June. With limited scope to ease policy, the central bank has started forcing lenders — through regulations and penalties — to give out more credit in an attempt to stimulate growth.
  • Inflation eased to a 43-month low in August as food costs grew less. However, food-price growth may pick up again after President Muhammadu Buhari closed the border with Benin to halt rice smuggling and ordered the central bank to stop dollar supplies for some food imports.
  • The naira continues to be under pressure and by keeping rates on hold, the central bank would ensure portfolio investment doesn’t slump.

“Projections indicate that real GDP during the third and fourth quarter of 2019 would average 2.11% and 2.34% respectively, driven primarily by non-oil sector,” Emefiele said. “The headwinds to the growth prospects remain high — unemployment, rising public debt and high insecurity across the country.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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UK employers cut growth forecasts as Brexit, global slowdown weigh

LONDON (Reuters) – The British Chambers of Commerce cut its forecast for economic growth this year and 2020 on Monday, blaming a slower global economy, U.S.-China trade tensions and the persistent drag from Brexit.

The BCC, whose members employ about one in five British workers, cut its economic growth forecast for this year to 1.2% from its June forecast of 1.3% and lowered the figure for 2020 to 0.8% from 1.0%.

The BCC’s new 2020 prediction is well below the average 1.1% forecast for next year in a Reuters poll of economists, and would represent the slowest growth since the 2008-09 recession.

The group said its forecasts were based on the assumption that Britain avoids a damaging no-deal Brexit.

“Our latest forecast shows a number of warning lights are flashing for the UK economy, even if we are able to avoid a messy and disorderly exit from the EU in just a few weeks’ time,” BCC director general Adam Marshall said.

Prime Minister Boris Johnson has promised to take Britain out of the EU on Oct. 31, without a transition deal if necessary, but parliament has ordered him to delay Brexit if he cannot negotiate a new deal with Brussels next month.

The world economy is also losing momentum, largely due to an ongoing trade conflict between the United States and China which has hit goods exporters such as Germany especially hard.

Britain’s economy contracted by 0.2% in the three months to June, largely due to a hangover from preparations for the original March 29 Brexit date, but the BCC forecast a small bounce back to 0.3% growth in the current quarter.

Brexit uncertainty was hitting business investment – which was heading for its longest period of full-year declines in 17 years – and gains in productivity, limiting future rises in living standards, BCC economist Suren Thiru said.

The BCC forecast wage growth would average just under 3% over the next couple of years – a slower pace than so far this year – while inflation was seen holding at just over 2%, with Bank of England interest rates not rising until 2021.

Another employers group, the Institute of Directors, said a survey it conducted showed nearly 30% of member companies had or were considering setting up operations outside Britain because of Brexit.

Only 9% had or were considering setting up or moving operations back to Britain, the survey showed.

The survey also showed 51% of firms said a no-deal Brexit would be the worst outcome while 32% said further delay could have a worse impact.

“The idea of leaving the EU without a deal in place is certainly the bigger concern, but the prospect of repeated delays with no clear path forward is far from an appetizing prospect,” Allie Renison, the IoD’s head of trade policy, said.

The IoD survey of 952 companies was conducted between July 1 and 17.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Goldman Sachs has lowered its forecast for oil demand growth this year

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Indian economy set for weakest quarter of growth in 5 years: Reuters poll

By Indradip Ghosh

BENGALURU (Reuters) – The Indian economy likely expanded at its slowest pace in more than five years in the April-June quarter, driven by weak investment growth and sluggish demand, according to economists polled by Reuters.

That would reinforce concerns seen in the minutes from the central bank’s August meeting, which showed policymakers were worried about weak growth and indicated further rate cuts in the next few months to boost the slowing economy.

The poll median showed the economy was expected to have grown at a year-on-year pace of 5.7% in the June quarter, a touch slower than 5.8% in the preceding three months. But a large minority – about 40% of nearly 65 economists – expect an expansion of 5.6% or lower.

The GDP data is due to be released at 1200 GMT on Friday.

If the forecast is realized, it would be the weakest start in the first three months of a fiscal year in seven years.

“The deceleration in growth that commenced in the second quarter of the fiscal year ending March 2019 is likely to have continued,” said Rini Sen, India economist at ANZ.

“A host of high frequency indicators – consumption and investment – have continued to weaken. The most prominent ones include auto sales, output of consumer durables, cement and steel production.”

Domestic passenger vehicle sales in July dived at the steepest pace in nearly two decades and declined for the ninth straight month in July, largely due to a liquidity crunch causing huge job cuts in the sector.

These measures, in addition to the risk of further escalation of the U.S. and China trade war are weighing on demand and business confidence in India.

The median response to an extra question in the poll, which was taken Aug. 21-26, showed the average growth rate for the current fiscal year 2019-2020 is likely to be 6.5% despite a weak start. But it is a downgrade from 6.8% predicted just last month and well below the RBI’s projection of 6.9%.

The RBI lowered its outlook for the fiscal year 2019-2020 at its August meeting. It has cut a total of 110 basis points in the repo rate since February, which includes an unconventional cut of 35 basis points earlier this month to 5.40%.

But with inflation not expected to rise anytime soon, the central bank will likely ease its benchmark rate by 25 basis points again to 5.15% at its October meeting, followed by a 15 basis points cut in the first quarter of 2020, according to a separate Reuters poll. [RBI/INT]

Those cuts, in addition to a suite of recently announced fiscal measures, could provide some cushion for the economy in coming months.

On Friday, Finance Minister Nirmala Sitharaman announced reforms to revive economic growth, including rolling back recent tax hikes on foreign and domestic equity investors and several measures for industries.

“We believe that the measures announced by the finance minister will help to provide a fillip to credit growth, rate transmission and improving investor sentiment,” noted economists at Morgan Stanley (NYSE:).

“We continue to see a slow recovery in growth, as monetary measures will help but may not be sufficient to create a V-shaped recovery, especially in the context of slowing global growth.”

(Polling by Khushboo Mittal and Shaloo Shrivastava; Editing by Sam Holmes)

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RBA’s Lowe says monetary policy can push up asset prices but can’t deliver medium-term growth

Lowe at Jackson Hole

Lowe at Jackson Hole

RBA Governor Philip Lowe used his speech at Jackson Hole to prod governments to do more for growth.

“We are experiencing a period of major political shocks,” he said. “Political shocks are turning into economic shocks.”

He warned that central banks have a limited and partly exhausted arsenal of tools to fight back.

“Monetary policy cannot deliver medium-term growth,” Lowe said. ” We risk just pushing up asset prices.”

Instead, he called for investment in infrastructure and structural reforms.

This is the same sort of thing the ECB and BOJ have been saying for years but with everyone headed to the zero-bound, expect to hear much more of it in the years ahead.

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StockBeat: Nvidia Climbs as Wall Street Says Growth Story in ‘Early Innings’

© Reuters.  © Reuters.

Investing.com – Nvidia climbed on Wednesday after a Wall Street analyst backed the chipmaker to leave its rivals behind as its growth story remains in the “early innings.”

Benchmark analyst Ruben Roy initiated coverage on the stock with a buy rating and a $ 210 price target, suggesting upside of more than 25% from its closing price of $ 167.87 a day earlier.

Nvidia (NASDAQ:) climbed 2.1% in afternoon trading. It’s up 28.4% on the year and 4.4% in the third quarter.

Nvidia is “uniquely positioned” to grow at a faster compound annual rate than its peers and is in the “early innings” of its growth story due to the “increasing use of GPUs across a diverse set of growth markets,” Roy said.

Earlier this week, Microsoft (NASDAQ:) said it would use Nvidia’s RTX video graphics units to spice up the visuals of its popular world-building game “Minecraft.”

Semiconductors have been a hot group this year. The was up nearly 1% on the day, taking its gains for the year so far to about 31%.

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Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Vietnam Investors Shrug Off U.S. Trade Threat in Favor of Growth

© Reuters.  Vietnam Investors Shrug Off U.S. Trade Threat in Favor of Growth © Reuters. Vietnam Investors Shrug Off U.S. Trade Threat in Favor of Growth

(Bloomberg) — Foreign investors in Vietnam stocks are shrugging off the threat of additional U.S. tariffs on the country’s exports, even as the Southeast Asian manufacturing hub draws increased scrutiny from President Donald Trump’s government.

Robust economic growth and the government’s planned sale of stakes in state-controlled companies will offset dips in equity prices triggered by trade frictions, according to investors including Federico Parenti at Sempione Sim SpA in Milan.

“I didn’t change my view,” said Parenti, who helps manage about $ 3 billion including Vietnam equities at Sempione Sim in Milan. “When you invest in a country, you do it for the long term.” Vietnam Dairy Products JSC and Saigon Beer Alcohol Beverage Corp. are among the firm’s holdings.

Foreign investors have poured $ 843 million into Vietnam’s $ 191 billion stock market in the 12 months through Aug. 14, even as the benchmark Ho Chi Minh Stock Index fell about 0.9% in the period. The gauge has climbed 9.7% so far this year through yesterday’s close, the most among Southeast Asian markets and outpacing the 0.8% rise in the MSCI AC Asean Index.

The government’s sale of shares in state-enterprises helped raise about 5.16 trillion dong ($ 222 million) in the first half of this year, adding to a record $ 5.09 billion from initial public offerings last year. Corporate tax breaks, along with economic expansion exceeding 6%, “augur well for the capital market,” said Mark Mobius, who runs Mobius Capital Partners LLP.

To be sure, most investors can’t ignore the risk of the U.S. increasing duties on Vietnam goods, said Felix Lam, who manages close to $ 2 billion in Asia Pacific equities at BNP Paribas (PA:) Asset Management. While Lam doesn’t hold Vietnam shares as turnover is too low for his mandate, he said an increase in liquidity could allow him to buy the stocks.

READ: Vietnam Won the U.S.-China Trade War But Is Now in Trouble

“If trade negotiations take longer and are more severe, then Vietnam will be affected alongside other Asian countries,” said Lam. Still, he added, “one would expect that companies would have captured quite a lot of that in their share prices already.”

The Trump administration has been increasing pressure on Vietnam to reduce its growing trade surplus with the U.S., including increasing to 400% in July the duty on steel imports that it alleges originated in Taiwan and South Korea. Exports to America equaled 20% of gross domestic product last year and almost 26% in the first half of 2019.

For Bharat Joshi, who helps oversee $ 650 billion as a fund manager at Aberdeen Standard Investments, Vietnam’s domestic demand outweighs risks arising from trade tensions. The firm counts Vietnam Dairy Products as an “anchor investment” in the country.

“There is structural growth happening on the ground, you have rising middle-class income, demand for credit is starting to expand, and the government is doing all it can to privatize,” said Joshi.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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