Global stocks retreat after grim China data, oil plummets

Mon Feb 1, 2016 3:18pm EST
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By David Gaffen

NEW YORK (Reuters) - Global markets got February off to a cautious start on Monday following a rocky January, with stocks and oil falling in the wake of weak manufacturing reports around the world.

U.S. and European stocks fell. Disappointing euro zone manufacturing data dovetailed with the fastest contraction in China's giant factory sector in over three years, and U.S. manufacturing sentiment remained weak.

Those surveys showed the new year began much as the old one ended, with too much capacity chasing too little demand. The U.S. Institute for Supply Management showed a bit of stabilization, but its sentiment survey was still below 50, the demarcation line for expansion versus contraction.

"The contraction in manufacturing is ongoing but no longer getting worse," said Steve Blitz, chief economist at ITG Investment Research in New York.

The Dow Jones industrial average .DJI fell 0.25 percent to 16,425.55, the S&P 500 .SPX lost 0.21 percent to 1,936.26 and the Nasdaq Composite .IXIC dropped 0.07 percent to 4,610.58.

Oil prices, the other major factor influencing markets this year, also fell. U.S. crude CLc1 was down more than 6 percent to $31.50, resuming a downtrend that had been interrupted recently on hopes for production cuts. Brent LCOc1 dipped as well, falling 5.3 percent to $34.07 a barrel.

"China is the last standing consumer of oil outside of the U.S. The problem is that everyone is relying on them," said Carl Larry, director of business development at Frost & Sullivan in Houston.

"As long as we keep in this scenario where China is the only real consumer to pick up the pace, we're going to see moves lower every time China has an issue with their economy."   Continued...

Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, February 1, 2016.     REUTERS/Staff/Remote