World equity indexes dropped yesterday as disappointing trade data in world No. 2 economy China stoked concerns over weakening global growth, while oil prices slipped.
All three major US stock indexes were down more than one per cent, while European shares closed 1.1 per cent lower.
Fresh builds at the delivery point for US crude futures also dragged down oil prices, offsetting bullish Opec demand projections.
Data showed China’s October exports fell for a fourth month, while imports also dropped, leaving the nation with a record high trade surplus of $61.64 billion. The US is one of China’s biggesttrade partners.
Also not boding well for world growth, the Organisation for Economic Co-operation and Development cut its 2015 global growth forecast again. But it said the US Federal Reserve should raise interest rates as the US economic recovery gains steam.
Recent data showing robust US job growth has boosted bets for a long-anticipated December rate hike by the Fed.
“Market participants are of the view [after strong US jobs data on Friday] that the worries about the global economy are overdone but then this weekend we saw some disappointment in the China exports,” said Emile Cardon, a strategist at Rabobank in the Netherlands.
The Dow Jones industrial average fell 229.76 points, or 1.28 per cent, to 17,680.57, the S&P 500 lost 28.97 points, or 1.38 per cent, to 2,070.23 and the Nasdaq Composite dropped 75.98 points, or 1.48 per cent, to 5,071.14.
Growth sectors, including energy and consumer discretionaries, led the decline.
MSCI’s all-country world index fell 1.0 per cent, while European shares closed down 1.1 per cent.
Shares in Portugal, where an agreement between leftist parties to work together to form a government unnerved investors, led the European market lower.
In the oil market, Brent crude for December delivery was down 28 cents at $47.14 a barrel, while December US crude fell 46 cents to $43.83 after falling nearly 5 per cent last week.
A report saying the European Central Bank was forming a consensus to cut its deposit interest rate further into negative territory caused the euro to slip against the dollar.
The euro had risen from its Friday lows, when it had fallen to $1.07045, its weakest since mid-April. But then it slipped back to trade at $1.0742.
US Treasuries prices extended recent losses as traders raised bets the Fed will raise rates in December.
Benchmark 10-year Treasuries notes were down 3/32 in price with a yield of 2.345 per cent.
The 10-year yield earlier touched 2.377 per cent, which was the highest intraday level since July 21, according to Reuters.
“People are really buying into the December rate-hike story,” said Gennadiy Goldberg, interest rates strategist at TD Securities in New York.