Shares Drop as Data From China Dims Outlook

On Tuesday, stock shares across the globe were down snapping a winning streak that had been the longest since this past February after trade data from China added another sign that the second largest economy in the world is sputtering.

A big drop in the prices of oil also weighed down stock on Tuesday.

Imports to China plunged by 20% during September, casting more doubt on the domestic demand strength in the economy. Oil dropped by over 5% overnight after it was reported that OPEC continued to increase its production.

Those factors helped to overshadow a mega-merger deal that saw the two largest brewers in the world merge, as No, 1 Anheuser-Busch InBev will take over No. 2 SABMiller in a deal of $104.4 billion in cash stock.

Emerging market currencies and world bond rates were down, while the prospects of an interest rate increase in the U.S. this year became dimmer pushing the dollar lower and lifting the euro.

Inflation in UK that was weaker than had been expected and weaker investor sentiment in Germany also pushed yields on bonds lower.

The trade data out of China for September showed a fall of 3.7% in exports from the same time last year, less than the drop of 6.3% forecasted by economists. Imports however, plunged by 20.4%.

The weak economy prompted the central bank of China on Monday to increase its program that increases it banks’ ability to lend, which help increase shares on mainland China to highs of seven weeks.

Shanghai shares on Tuesday edged up 0.2%. It was the index’s fifth consecutive gain and a run not seen since mid July.

Prices of oil saw their biggest fall for the past six weeks Monday after it was reported that OPEC had continued to increase its production of crude that triggered a run of profit-taking from the 11-week high reached last week.

The soft data out of China and the weakness in oil prices were just reminders that inflation is not any problem which fed into the opinion that the U.S. central bank would be in no hurry to increase its rates.

 

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