Wall Street, Europe dip after Chinese shares tumble

Reuters Updated - January 23, 2018 at 01:14 PM.

A 6 per cent tumble in Chinese shares on Tuesday and soft earnings from Wal-Mart held US equities in check, while copper touched multi-year lows.

Wal-Mart Stores Inc fell 3.4 per cent to $69.48, the biggest drag on both the Dow and S&P 500, after reporting weaker-than-expected quarterly earnings and lowering its full-year forecast.

A broad measure of Asian stocks fell to a two-year low, and Wall Street traded lower as the Chinese yuan weakened against the dollar, sparking renewed fears that Beijing may be intent on a deeper devaluation of the currency.

"You would think that a 6 per cent China move amid the recent currency adjustments would have netted a more negative result," said Andre Bakhos, managing director at Janlyn Capital LLC in Bernardsville, New Jersey.

"When we approach downside sell-offs the market is bending but not breaking and when we get towards the upper end of the range there is not enough to push it through, so it's been a rubber band kind of mentality."

The Dow Jones industrial average fell 33.84 points or 0.19 percent to 17,511.34, the S&P 500 dropped 5.52 points or 0.26 per cent to 2,096.92 and the Nasdaq Composite declined 32.35 points or 0.64 per cent to 5,059.35.

Earlier, China's main Shanghai Composite and Shenzhen 300 indexes lost fell more than 6 per cent as investors bet demand in China will cool further.

Asian markets

MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.2 per cent after hitting its lowest since July 2013. Japan's Nikkei dipped 0.3 per cent.

MSCI's all-country world stock index eased 0.31 per cent.

European markets

Britain's FTSE 100 closed down 0.4 per cent. The pan-European FTSEurofirst index of 300 leading shares managed a gain of 0.2 per cent, after earlier declines. Germany's DAX dropped 0.2 per cent and France's CAC 40 fell 0.3 per cent.

The worries about China came on a day when trade in the yuan was relatively calm after Beijing fixed the currency's exchange rate marginally higher for the third successive session.

China's central bank had on Tuesday set the yuan's midpoint near Monday's closing price at 6.3966 per US dollar. In the spot market, the yuan closed flat at 6.3938 .

Copper slumps to 6-year low

Concerns about slowing growth in China also hit copper prices, which slid to a six-year low of $4,983 a tonne, to pierce the psychological $5,000 level, and were last down 1.8 percent at $5,022 a tonne.

But oil prices rebounded from initial declines after bullish US housing data and on bets on an inventory decline. Brent oil futures settled up 7 cents at $48.81 per barrel to steady after a three-day fall, while US crude rebounded from nearly a 6-1/2-year low to settle up 1.8 per cent at $42.62.

Fed policy meeting

Investors will look to US inflation data and minutes of the latest Federal Reserve monetary policy meeting on Wednesday, as they seek for clues as to when the Fed will begin raising interest rates.

Most investors are expecting a rate increase to occur by the end of the year. Benchmark 10-year Treasury notes were down 13/32 in price to yield 2.1961 per cent.

Published on August 19, 2015 03:45