Wall Street retreats on China worries

With few other catalysts in play today, US stocks have slipped into the red on news of a drop in Chinese exports last month.

Yesterday marked the five-year anniversary of the S&P’s recession closing low of 676.53. The index set a fresh high on Friday, but has slipped back today, as the US stock market followed the retreat of bourses from around the world in the wake of this weekend’s surprisingly weak trade data from China.

Chinese exports, which analysts had expected to grow in February, declined 18.1%. This is a fairly shocking result, and it has sent shockwaves of concern about the state of the global recovery rippling through financial markets around the world.

Had there been any US –based macro-economic reports out today, there might have been some kind of counterweight to the disappointing China reports, but with a dearth in that regard, investors have begun some defensive selling. By early afternoon in New York, the Dow Jones was down 0.33% or 55 points at 16,397 and the S&P 500 was off by 0.21% at 1874.1.

A fall in Chinese exports holds a particular concern for US investors, as the US is a major importer of Chinese goods and this now raises a few worries about how Thursday’s retails sales data for the US will look. No doubt the weather-related excuses are being dusted down in readiness for another outing.

Charles Plosser, the President of the Philly Fed, joined the chorus of voices citing the weather as one of the causes of the softness seen in the last few employment reports. ‘These numbers most likely reflected in part the effect of the unusually severe winter weather,' he said in a speech at the Bank of France in Paris today.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.