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Stock Markets Start New Year With a Slide Stock Volatility Continues as Rising Oil Prices Help Erase Early Losses
(about 3 hours later)
HONG KONG — Investors hoping for a fresh start in 2019 were disappointed on Wednesday as shares on Wall Street tumbled at the start of trading after declines in Europe and Asia. HONG KONG — The new year began on Wall Street with a new round of choppy trading, as stocks opened sharply lower but recouped their losses by late morning after a surge in crude oil prices.
The global drop followed weak economic data from China that returned investors’ focus to the softening outlook for the global economy. Volatility has been a defining characteristic of the stock market lately. Investors are trying to gauge the odds of an economic slowdown in the United States, and how such an event might be affected by rising interest rates, uncertainty in American politics and a trade war with China.
Investors had hoped for a respite from last year, when markets in the United States fell more than 6 percent and many global indexes fell even more. Slowing global economic growth, higher interest rates in the United States, the simmering trade war between Washington and Beijing, and rising uncertainty in American politics all weighed on stocks. The tone on Wednesday was initially set by fresh evidence that the Chinese economy, the world’s second-largest, is slowing. Major benchmarks in Asia declined and shares in Europe bounced back after early losses.
Crude oil jumped more than 3 percent, and energy stocks were among the best performers in the S&P 500. The American crude benchmark was trading as high as $47.55 a barrel by late morning. Oil prices experienced their first decline in three years in 2018, amid worries about excess supply and softer demand.
[Wall Street’s stock pickers are still hopeful about the year ahead, but here are four things they’re worried about.][Wall Street’s stock pickers are still hopeful about the year ahead, but here are four things they’re worried about.]
On Wednesday, their mood did not improve. The bad economic news from China involved a drop in factory activity in the country month, according to government and private measures released this week. The dour numbers indicated that the trade war between China and the United States was beginning to weigh on the Chinese manufacturing sector.
Bad economic news from China set the tone in Asia, where stocks fell on every major exchange that was open. Factory activity in China shrank in December, according to government and private measures released this week. The dour numbers indicate that the trade war between China and the United States was beginning to weigh on the Chinese manufacturing sector.
In Europe, morning trading also started on a pessimistic note. The latest manufacturing data for the eurozone released on Wednesday showed an across-the-board slowdown in December. The Euro Stoxx 50 was down more than 1 percent in afternoon trading.
The Hang Seng in Hong Kong dropped 2.8 percent. In China, the Shanghai Composite index fell 1.2 percent and the Shenzhen Composite index closed 0.9 percent lowerThe Hang Seng in Hong Kong dropped 2.8 percent. In China, the Shanghai Composite index fell 1.2 percent and the Shenzhen Composite index closed 0.9 percent lower
The Taiex index in Taiwan fell 1.8 percent, while the Kospi in South Korea was down 1.5 percent. Japan’s markets were closed for a holiday.The Taiex index in Taiwan fell 1.8 percent, while the Kospi in South Korea was down 1.5 percent. Japan’s markets were closed for a holiday.
Many investors had hoped the poor sentiment that weighed on markets at the end of December might dissipate in 2019, particularly on Wall Street, where the underlying American economy is still viewed as sound. Manufacturing data for the eurozone that was released on Wednesday also showed an across-the-board slowdown in December. But after dipping more than 1 percent to start the day, the Euro Stoxx 50 was essentially unchanged by late afternoon.
But the poor data from China highlighted the risks of a continuing trade war, as well as slowing global growth. In the United States, increased borrowing costs could also weigh on stock prices, while uncertainty surrounding Britain’s departure from the European Union continues to unnerve investors. The pound, a barometer of concern surrounding Brexit, fell to $1.2674.