Allstate Journal

Dow down, U.S. oil nears $47 post-China slide

Stocks are falling Monday after the Shanghai Composite plunged 8.5% and Europe benchmarks got hammered. The U.S. stock market is kicking off the new week on a rocky note as investors react to the biggest one-day stock plunge in mainland China since 2007 and a continued sell off in commodities. Other Asian markets were rattled — Japan’s Nikkei 225 index lost 1% while Hong Kong’s Hang Seng index dropped 3.1%.USA - Business - Dow Jones Sign

Investors were also cautious ahead of the Federal Reserve’s policy meeting later this week. In Europe, Germany’s DAX and the CAC 40 of France were clobbered, plunging 2.6% each. The FTSE of Britain ended down 1.1%. The stock rout in China raises fresh fears that the meltdown in the Chinese stock market — which has been fueled by speculative buying by individual investors with borrowed money — would exacerbate an economic slowdown already occurring in China.

Monday’s sharp sell off follows a warning from a big U.S. hedge fund last week that risks in China are rising due to the massive losses and what impact it would have on the psyche of investors there. The massive one-day drop in China comes despite a spate of steps taken by the Chinese government — such as halting trading in impacted companies and short selling, or bets that stocks will go down — to stabilize the market there.

Last week, the broad U.S. stock market fell 2.2% as U.S. investors reacted to a mixed bag of corporate earnings. While nearly three out of four companies in the Standard & Poor’s 500 stock index have topped forecasts, which is better than the long-term “beat” average of 63%, Wall Street punished stocks that failed to meet sales and revenue expectations. A rout in the commodity complex, due in part to fears of slowing growth in China, is also weighing on investor sentiment. A barrel of West Texas Intermediate crude, for example, was again trading below the key $50-per-barrel level in early trading today. U.S.-based crude was off 81 cents, or 1.7%, to $47.80.


February 2018
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