The stock market was slipping Monday as poor economic data out of China underscored many of the macro challenges facing markets. Inflation fears remained on the radar as Bitcoin and oil prices surged higher.
Futures for the Dow Jones Industrial Average were indicating an open 80 points lower, after the index rose 382 points Friday to close at 35,294. Futures for the S&P 500 and Nasdaq indicated a similar start.
Investor concerns remain focused on familiar themes such as inflation, supply-chain disruptions, and central bank stimulus. In the spotlight Monday were poor economic data out of China showing the macro impact of some of these forces.
Chinese gross domestic product expanded by 4.9% year-over-year in the third quarter, while industrial production for September rose 3.1%. Both measures fell short of expectations.
A slowdown in economic growth “was mainly because of policy challenges from deleveraging the real estate sector, increasing compliance on the tech sector, and the clampdown on tuition centers and the entertainment sectors,” said Iris Pang, the chief economist for Greater China at ING bank. The economist cited the looming failure of indebted developer China Evergrande (3333.H.K.) as the cause of pressure on the property sector.
“Manufacturing was hit hard by supply-chain disruptions due to Covid as some port operations were hit in 3Q21, and chip shortages continued in the quarter,” Pang added on the industrial numbers.
All eyes remain on inflation, with attention in Europe focused on comments from Andrew Bailey over the weekend, after the Bank of England governor said the central bank would act to curb inflation.
Inflationary fears were stoked by higher commodity prices, as oil continued its apparently inexorable march higher. Futures contracts for international benchmark Brent crude were up nearly 1% and flirting with the $86 per barrel mark, as U.S. futures for West Texas Intermediate crude rose 1.3% to around $83.40.
“The picture across the real economy may look rather more mixed, especially if you are exposed to rising interest rates, material costs or supply-chain disruptions,” said Jeffrey Halley, a broker at analyst Oanda, noting the blowout earnings from major U.S. banks last week.
With technology, consumer goods, and manufacturing groups reporting this week, “their 2022 outlooks will be of more importance than their actual results and this week could see heightened two-way volatility in stocks,” Halley said.
Elsewhere, the price of Bitcoin was approaching its all-time high of near $65,000 amid expectations that U.S. regulators would approve the first exchange-traded fund tracking Bitcoin price futures. The leading crypto was around 4% higher Monday to near $62,000.
Here are four stocks on the move Monday
Valneva (VLA.France) rose 32% in Paris, after the biotech reported positive phase-three results for its Covid-19 vaccine, which it said outperformed the comparable rival vaccine from AstraZeneca (AZN). AstraZeneca fell 0.6% in London.
Umicore (UMI.Belgium) fell 4.6% in Brussels, after the materials technology group, which supplies rare metals to the electric-vehicle industry, cut its 2021 outlook due to the chip shortage.
Volkswagen (VOW3.Germany) fell 1.3% in Frankfurt following reports that its Skoda unit would halt production for two weeks due to component shortages.
Write to firstname.lastname@example.org