It’s a similar story for the afternoon trading session in New York today as it was yesterday, namely that a combination of negative issues are nibbling away at investor confidence. The two main culprits are China and Russia, although both are very different situations of course.
News that Chinese company Shanghai Chaori Energy Science & Technology had defaulted on bond payments came and went last week without causing too many ructions to US stocks, depite rattling the copper market. But now after a handful of disappointing economic indicators out of China that point to a slowing economy, the news of the first Chinese company to default on corporate bonds onshore starts to look part of a worrying bigger picture.
Mining company Freeport-McMoRan Copper & Gold dropped 2.5%, while oil and gas producers EOG Resources (-1.9%), Pioneer Natural Resources (-3.2%) and QEP Resources (-1.2%) were other commodity-related losers.
Sentiment has shown quite a bit of fortitude in the face of geo-political worries emanating from Ukraine and the Chinese growth concerns, but with two days of declines on Wall Street now there is a hint that we could be seeing investor confidence starting to buckle. The US economic calendar is thin again tomorrow and it is Thursday’s retail sales report that could prove to be a key determinant of near-term direction for the market.