Wall St set to open lower as weak Chinese data sparks fears of slowdown

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 22, 2022. REUTERS/Brendan McDermid/File Photo

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  • China unexpectedly lowers key rates as economic data disappoints
  • Closed futures: Dow 0.59%, S&P 0.64%, Nasdaq 0.48%

Aug 15 (Reuters) – U.S. stock indices headed for a lower open on Monday, mirroring global markets, after weak economic data out of China reignited fears of an economic slowdown in the world’s second-largest economy .

China’s central bank cut key rates to boost demand, with data showing an unexpected slowdown in the economy in July as factory and retail activity were squeezed by Beijing’s zero COVID policy and a crisis real estate. Read more

U.S.-listed shares of Chinese e-commerce giant Alibaba Group Holding Ltd and internet company Baidu Inc each fell more than 1% in trading before the bell.

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Megacap growth and technology stocks such as Apple Inc (AAPL.O) and Amazon.com Inc (AMZN.O) slid 0.5% and 0.8%, respectively, while banks also edged lower. declined after posting six straight weeks of gains.

“With the recent rally we’ve had from the June lows, it just gives investors reason to pause today,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.

“I think the main reason futures are down is that China surprisingly cut one of its key rates as the economic news was a bit weaker than expected.”

Oil stocks Exxon Mobil Corp (XOM.N), Chevron Corp (CVX.N), Halliburton Co (HAL.N) and Marathon Oil Corp (MRO.N) fell between 2.9% and 4.1% as rough prices fell on demand concerns in China, the world’s largest importer of rough.

As of 8:12 a.m. ET, Dow e-minis were down 199 points, or 0.59%, S&P 500 e-minis were down 27.25 points, or 0.64%, and e-minis Nasdaq 100 were down 64.75 points, or 0.48%.

Wall Street has rallied in recent weeks, with the benchmark S&P 500 recovering half of its losses this year as optimism returned to markets following data that raised hopes that the Reserve federal government can achieve a soft landing for the economy.

The S&P 500 and Nasdaq posted their fourth straight week of gains on Friday even as Fed officials pushed back on expectations that the central bank would end its rate hikes sooner than expected, and economists warned that inflation could return in the coming months.

Meanwhile, analysts and advisers were optimistic that the decision to remove five Chinese state-owned companies from the New York Stock Exchange could pave the way for Beijing to strike an audit deal with the United States, ending to a dispute over ten years old. Read more

US-listed shares of five Chinese companies China Life Insurance Co Ltd, Sinopec, Aluminum Corp of China Ltd, PetroChina Co Ltd and Sinopec Shanghai Petrochemical Co Ltd lost between 1.7% and 7.2%, extending the decline of Friday.

Miner Turquoise Hill Resources Ltd plunged 17.4% as it rejected an offer from majority shareholder Rio Tinto Ltd (RIO.AX), (RIO.L) to buy the 49% stake it does not own already for 2.7 billion dollars. Read more

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Reporting by Bansari Mayur Kamdar and Susan Mathew in Bengaluru; Editing by Shounak Dasgupta

Our standards: The Thomson Reuters Trust Principles.

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