Slow start for global equities as China slowdown takes its toll

Global stocks have had a troubled start to the new year after economic data from China fuels investors growth concerns and adds weight to worries of a global slowdown.

In the US, futures contracts on the S&P 500 slid as much as 2% on Wednesday, with those on the Nasdaq down as far as 2.8%.

In Europe, the Stoxx Europe 600 suffered losses despite holding steady over the last three trading sessions, while the FTSE 100 fell as much as 1.8% in early trading on Wednesday.

The declines seen in the US and Europe also spread to Asia, with the S&P/ASX 200 falling 1.57%.

Chinese data drives 2019 declines

In December, China’s manufacturing purchasing managers’ index fell to 49.7 from 50.2 in November, below the 50 threshold for the first time since May 2017, according to a recent report by Caixin Media and IHS Markit.

The data shows that external demand for Chinese goods has ‘remained subdued due to the trade frictions between China and the US, while domestic demand weakened more notably,’ Director of Macroeconomic Analysis at CEBM Group Zhengsheng Zhong said.

‘Companies had a stronger intention to destock and prices of industrial products were declining, which could further drag on production,’ he added. ‘It is looking increasingly likely that the Chinese economy may come under greater downward pressure.’

Global stocks feel the January blues

Global stocks ended the year in the red after equity markets witnessed one of the worst downturns since the financial crisis a decade ago, with investors hopes of a January recovery dashed as macroeconomic headwinds take their toll.

’The disappointment that came through in December has transferred into January as well,’ IG Asia Pte market strategist Jingyi Pan said.

And, despite US President Donald Trump showing willing to reach a shutdown deal ongoing political uncertainty in the US, Europe and escalating trade tensions with China ‘brings back to the surface worries on growth,’ she added.