China trade report sends global stocks lower | Wright Investors …

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Negative news from Asia got stocks off on the wrong foot on Monday to start the week. A late rally in the last hour of trading fell just short of lifting any of the major U.S. averages into positive territory, with both the S&P 500 and NASDAQ ending the day down less than 0.1% after having been lower by 0.5% or more earlier in the session. The Dow took a bigger loss, losing 0.2%, mainly due to a 1.3% drop in component Boeing, which had been down earlier as much as 3% after the company reported that “hairline cracks” had been discovered in the wings of about 40 Dreamliner jets currently under production, the latest setback for the company’s newest airliner. But BA was hardly the only drag on the Dow, with 22 of its 30 members lower on the day. Among the S&P 500, six of its 10 sectors were lower, led by industrial stocks.

Global stocks took their cue from China, where stocks prices were sharply lower after the government’s customs administration said the country ran its first trade deficit for the first time in nearly a year after exports unexpectedly dropped more than 18% in February. While the figure was likely skewed by the week-long New Year holiday at the beginning of the month, it was well below January’s nearly 11% increase and the 7.5% rise analysts were predicting. China’s CSI 300 Index, which tracks the largest China-traded stocks, fell 3.3% to its lowest level in five years, while the Shanghai composite fell 2.9%, its biggest drop since last June, closing below 2000 for the first time since January 20 and at its lowest level since the end of July.

In Japan, the Nikkei 225 fell 1% after the government downwardly revised fourth-quarter GDP growth to 0.7% from the preliminary estimate of 1%. At the same time, the country’s current account deficit widened to a record $15.4 billion in January. The one bright spot in Asia continued to be India, where the Sensex managed a modest 0.1% gain after rising almost 4% last week.

European stocks were mixed but sovereign bond prices were higher, lowering yields. The Stoxx Europe 600 fell 0.5%, dragged down by a 0.9% drop in German stocks, but share prices were higher in France, Italy and Spain. In the bond market, yields on 10-year Spanish and Italian government bonds fell about five basis points to near-record low levels of 3.31% and 3.37%, respectively. German bund yields fell three bps to 1.63%. The euro was largely unchanged, remaining slightly below $1.39. Oil prices were lower, with WTI futures falling about 1.5% to about $101 a barrel.

Reports/dates/facts/links worth paying attention to over the next week:

March 12: U.S. Treasury monthly budget report; 10-year Treasury note auction.
March 13: Retail sales for February; weekly unemployment claims; 30-year Treasury bond auction.
March 14: Producer price index for February; University of Michigan consumer sentiment infex for March, first reading.

Copyright © 2014 by Wright Investors’ Service, Inc. The views expressed in this blog reflect those of Wright Investors’ Service, Inc. and are subject to change. Statements and opinions therein are based on sources of information believed to be accurate and reliable, but Wright Investors’ Service, Inc. makes no representations or guarantees as to the accuracy or completeness thereof. These views should not be relied upon as investment advice.

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