While you were sleeping: China, Fed hike weigh

Wednesday 11th November 2015

Wall Street moved lower, while US Treasuries rose, amid fresh data showing the strength of the US economy and the weakening of growth in China.

Shares of Apple fell, last 2.3 percent weaker, after Credit Suisse downgraded its projection for Apple’s earnings for 2016 and lowered its iPhone forecasts for next year, amid concern about demand for its iPhone 6s.

Fresh data from China underpinned concern about the nation’s slowing growth at a time the US Federal Reserve is considering its first interest rate hike in almost a decade. A National Bureau of Statistics report showed China’s consumer price index increased a lower-than-expected 1.3 percent in October from a year earlier, following a 1.6 percent gain in September.

“The key driver today is probably China,” Mohit Kumar, head of interest-rate strategy at Credit Agricole’s corporate and investment bank unit in London, told Bloomberg. “Another factor is the concern that every other central bank is likely to be dovish, particularly as there is no inflation pressure. In that scenario, the Fed being hawkish would be detrimental for equities as well as the dollar.”

A Reuters survey of more than 80 economists published on Tuesday showed a 70 percent median chance the Fed would raise its benchmark overnight interest rate at its December 15-16 policy meeting.

In New York trading at about 11.24am, the Dow Jones industrial average slipped 0.2 percent. At about 11.10am trading, the Standard & Poor’s 500 Index fell 0.2 percent while the Nasdaq Composite Index dropped 0.6 percent.

In the Dow, declines in shares of Intel and those of Boeing, last trading 1.3 percent and 1.2 percent lower respectively, outweighed gains in shares of General Electric and those of Travelers Cos, last up 1.1 percent and 0.9 percent respectively.

US Treasuries rose, pushing the yield on 10-year notes three basis points lower to 2.32 percent.

In the US, a Labor Department report showed import prices fell 0.5 percent in October, after a 0.6 percent decrease in September. And the slide is set to continue, some say.

"We expect import prices to decline further over the medium term as the effects of past dollar appreciation continue to weigh on prices," Rob Martin, an economist at Barclays in New York, told Reuters. "In addition, we believe that weakness in emerging Asia, especially China, is likely to push down import prices over and above any effect from the appreciation of the dollar."

A separate report from the Commerce Department showed wholesale inventories rose 0.5 percent in September, following an upwardly revised 0.3 percent increase in August.

Shares of Gap dropped, last 4.5 percent lower, after the retailer reported disappointing preliminary quarterly earnings.

In Europe, the Stoxx 600 Index ended the session with a 0.1 percent gain from the previous close. Germany’s DAX Index added 0.2 percent. France’s CAC 40 Index eked out a 0.02 percent advance. The UK’s FTSE 100 Index fell 0.3 percent.

BusinessDesk.co.nz

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