NEW YORK Stock markets on both sides of the
Atlantic took a steep downward turn on Tuesday after a US survey pointed to
the weakest manufacturing sector in a decade.
Combined with a tepid inflation reading from the eurozone, and confirmation
that British GDP contracted in the second quarter, the figures rekindled
fears over worldwide growth.
An index of US manufacturing activity fell to the lowest level since June
2009, according to the Institute for Supply Management, which pointed to
trade conflicts as the biggest headwind.
Global trade remains the most significant issue, as demonstrated by the
contraction in new export orders that began in July 2019, Timothy Fiore,
chair of ISM's manufacturing survey, said in a statement. Overall, sentiment
this month remains cautious regarding near-term growth.
The report came as the World Trade Organization on Tuesday cut its 2019
trade growth forecast to 1.2 percent, warning of an economic hit from
tensions over international commerce.
Trade conflicts heighten uncertainty, which is leading some businesses to
delay the productivity-enhancing investments that are essential to raising
living standards, Azevedo said.
And he cautioned that job creation could also be threatened as firms
employ fewer workers to produce goods and services for export.
Eurozone stocks, which had spent most of the session calmly tweaking
portfolios at the start of the final quarter, suffered an abrupt fall to end
Wall Street, which had opened higher, fell quickly into the red and stayed
down the rest of the day. Major indices ended down more than one percent.
The ISM report was a game changer, said LBBW's Karl Haeling.
There's a growing recognition that the spread of negative economic
impulses around the world is starting to land on US shores in a meaningful
Analysts have pointed to upcoming trade talks between Beijing and
Washington as critical to the market's fortunes in the coming period.
Other key potential catalysts include the third-quarter corporate earnings
period and upcoming Federal Reserve meetings that could lead to lower
Strike hits GM
Among individual companies, General Motors dropped 3.7 percent as a United
Auto Workers strike further pinched operations.
The company announced it will furlough 6,000 workers in Mexico due to the
strike, while JPMorgan Chase estimated the strike has cost the company around
$1 billion so far. Workers in Canada also were laid off temporarily.
Shares of online brokerage firms plunged after Charles Schwab announced
plans to eliminate commissions for many trades. Schwab fell nearly 10
percent, while Etrade sank 16.4 percent and TD Ameritrade nosedived 25.8
US-listed shares of Credit Suisse dropped 2.7 percent following the
resignation of chief operating officer Pierre-Olivier Bouee after an internal
investigation into the bank's decision to spy on a star banker who left for
An internal probe exonerated chief executive Tidjane Thiam in the scandal,
which has shaken the bank in recent weeks.
Key figures around 2045 GMT
New York Dow: DOWN 1.3 percent at 26,573.04 (close)
New York S and P 500: DOWN 1.2 percent at 2,940.25 (close)
New York Nasdaq: DOWN 1.1 percent at 7,908.68 (close)
London FTSE 100: DOWN 0.7 percent at 7,360.32 (close)
Frankfurt DAX 30: DOWN 1.3 percent at 12,263.83 (close)
Paris CAC 40: DOWN 1.4 percent at 5,597.63 (close)
EURO STOXX 50: DOWN 1.4 percent at 3,518.25 (close)
Tokyo Nikkei 225: UP 0.6 percent at 21,885.24 (close)
Hong Kong (closed)
Euro/dollar: UP at $1.0935 from $1.0899 at 2050 GMT
Pound/dollar: UP at $1.2300 from $1.2289
Dollar/yen: DOWN at 107.69 yen from 108.08 yen
Brent North Sea crude: DOWN 0.6 percent at $58.89 per barrel
West Texas Intermediate: DOWN 0.8 percent at $53.62 per barrel
Source: Bangladesh Sangbad Sangstha (BSS)