TOKYO (AP) — Global shares fell on Monday as interest rate hikes and a slowing Chinese economy weighed on investor sentiment.
European shares fell in early trading and Asian benchmarks also declined.
China reported its exports rose 3.7% over a year earlier in April to $273.6 billion, down sharply from March’s 15.7% growth, as global demand weakened. That added to pressure on the world’s second-largest economy after Shanghai and other industrial cities were shut down to fight virus outbreaks.
Imports crept up 0.7% in April to $222.5 billion, in line with the previous month’s sub-1% growth.
Companies and investors worry the ruling Communist Party’s “zero-COVID” strategy that temporarily closed most businesses in Shanghai and other industrial centers is disrupting global trade and activity in autos, electronics and other industries.
But a slowing global economy is also taking a toll.
“The blame rests partly with China’s COVID-19 outbreak, which has led to manpower shortages and bottlenecks in the logistics sector. But the extent of these disruptions shouldn’t be overplayed," Julian Evans-Pritchard said in a commentary. “Instead, the drop in exports seems to mostly reflect softer demand."
France's CAC 40 slipped 1.4% in early trading to 6,172.41. Germany's DAX fell 1.1% to 13,520.87. Britain's FTSE 100 was down 1.1% at 7,306.34. U.S. shares were set to drift lower with Dow futures dipping 1.3% to 32,388.0. S&P 500 futures fell 1.5% to 4,058.75.
The Shanghai Composite was little changed, adding nearly 0.1% to 3,004.14. Markets were closed in Hong Kong for a national holiday.
Japan’s benchmark Nikkei 225 lost 2.5% to finish at 26,319.34. South Korea’s Kospi dipped 1.3% to 2,610.81. Australia’s S&P/ASX 200 dropped 1.2% to 7,120.70. The benchmark in Jakarta, Indonesia, lost 4.4% as markets reopened after the Eid al-Fitr holiday last week.
Investors were watching for the outcome of the presidential election in the Philippines, although it remains unclear how economic policies might change. The son of long-ago overthrown Philippine dictator Ferdinand Marcos is the top contender in Monday’s vote, based on most voter-preference surveys.
A turbulent week on Wall Street ended Friday with more losses and the stock market’s fifth straight weekly decline. The pullback came as investors balanced a strong U.S. jobs report against worries the Federal Reserve may cause a recession in its drive to halt inflation.
The S&P 500 ended with a loss of 0.6%. The Dow Jones Industrial Average fell 0.3%, while the Nasdaq slid 1.4%. The Russel 2000 slid 1.7%, to 1,839.56.
Apart from concerns about inflation and coronavirus restrictions, the war in Ukraine is still a major cause for uncertainty. More than 60 people were feared dead after a Russian bomb flattened a school being used as a shelter, Ukrainian officials said. Moscow’s forces pressed their attack on defenders inside Mariupol’s steel plant in an apparent race to capture the city ahead of Russia’s Victory Day holiday Monday.
“Russia’s Victory Day today will also bring geopolitical risks back into the limelight as well. President Putin is likely to reiterate his justification for the Ukraine war but markets may be watching for any further efforts to ramp-up military operations to secure the war," said Yeap Jun Rong, market strategist at IG in Singapore.
The Fed is hoping to raise rates and slow the economy enough to snuff out the highest inflation in four decades, but it risks choking off growth if it goes too far or too quickly.
In energy trading, benchmark U.S. crude fell $1.29 cents to $108.48 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the basis for pricing oil for international trading, edged down $1.15 cents to $111.24 a barrel.
In currency trading, the U.S. dollar rose to 131.13 Japanese yen from 130.55 yen. The euro cost $1.0517, down from $1.0545.
AP Business Writer Joe McDonald in Beijing contributed.