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- China’s November industrial-production growth eased sharply to 5.4%, its lowest level since 2009. Global stocks plunged.
- Retail growth also eased, growing at 8.1%, its weakest pace in 15 years.
- Cracks are also continuing to show in Europe, with Italy, Germany, car sales, France, and Brexit all weighing on sentiment.
Fear has taken hold in equity markets after China’s industrial production plummeted, sparking a sell-off that spread globally. Cracks in the European economy are also continuing to show, weighing on those region’s equities.
China’s November industrial-production growth eased by half a percentage point to 5.4%, its lowest level since 2009. The data pointed to weak performance in key export sectors such as computers, electronics, and autos.
Retail growth also eased, growing at 8.1%, its weakest pace in 15 years, says Russ Mould, the investment director at AJ Bell.
China’s November trade data indicated signs of weaker growth in the rest of the world. Export growth declined to 5.4% from 15.5%, with shipments to the European Union and to Association of Southeast Asian Nations countries showing weakness while exports to the US dropped to 9.8% from 13.2%, according to Societe Generale.
“There have been some troublesome figures coming out of China in 2018 and another batch has now served to drag down markets in Asia and Europe,” Mould said. “China is finding it hard to sustain high levels of economic growth. There is some concern that the impact of the US-China trade war has yet to be properly felt, suggesting that China’s economic data could be in for more shocks in early 2019 unless the countries secure a permanent truce.”
Problems are also rumbling in Europe. Fears about Italy’s budget remained front and center Friday after the European Union suggested there was more to be done on the country’s budget deficit. British Prime Minister Theresa May was rebuffed by EU leaders in her attempts to renegotiate her Brexit deal. Germany‘s problems continued with composite PMI numbers sliding in December.
It follows an already subdued mood in Europe. The European Central Bank announced Thursday that it cut its economic growth forecasts and would end its bond-buying stimulus program. France’s Yellow Vest protests are harming the country’s economy.
Here’s a roundup of markets:
- In Asia, the Shanghai Composite closed down 1.5%. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.3%. Japan’s Nikkei also fell 2% Friday.
- The Euro Stoxx 50 was down 1.1% as of 10:20 a.m. in London (5:20 a.m. EST). The DAX, the FTSE, and the CAC were all down more than 1%.
- US stock index futures are following suit. The Nasdaq, the S&P 500, and the Dow 30 were all down about 1% in premarket.
- China’s woes weighed on commodities. Copper futures are down 1%, while Brent crude continued to tumble despite agreed OPEC and Russian cuts last week. Oil is down 0.6%.
- European car stocks also plunged after data showed new EU licenses fell 8.0% year-over-year in November following a 7.3% fall in October. Renault is down 3.6% while Volkswagen, Peugeot, and Daimler are trading down 2.4%. Germany’s BMW is down 1.9% and Fiat Chrysler is down 2%. Full-year car sales are expected to drop to 2% in 2018, down from 5% in 2017.
- US dollar index futures are up 0.5%.