US open: Stocks decline after slump in Asia

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Sharecast News | 04 Jan, 2016

Updated : 14:37

US stocks were under pressure on Monday as traders weighed a decline in Asian stocks and weak Chinese manufacturing data.

At 1430 GMT, the Dow fell 1.11%, the Nasdaq dropped 2.22% and the S&P 500 declined 1.22%.

It follows a plunge in Asian markets after short-selling in China on Friday as investors dumped holdings ahead of the imminent expiration of a share sales ban on listed companies’ major shareholders, imposed at the high of last year’s market meltdown.

“Long term investors need to ignore much of this short term noise and make sure they have enough cash for everyday needs,” said Mark Dampier, head of investment research at Hargreaves Lansdown.

“Despite the seas of red, market falls should be seen as buying opportunities.”

Meanwhile, Caixin’s purchasing managers’ index on China manufacturing fell to 48.2 in December from 48.6 the previous month, below expectations of 48.9 and the 50 level that separates expansion from contraction. The report added to concerns about the economic slowdown in the world’s second largest economy.

“This tepid manufacturing announcement compounds to the recent data from China which have followed a negative trajectory that has consequently intensified the growing anxieties around the pace of growth of the world’s second largest economy,” said FXTM research analyst, Lukman Otunuga.

US manufacturing data is still to come with reports from Markit and ISM at 1445 GMT and 1500 GMT respectively. The final reading on December manufacturing PMI from Markit is expected to be revised down to 51.1 from an earlier estimate 51.3.

ISM’s PMI is forecast to rise to 49 in December from the prior month’s 48.6, indicating a contraction.

Federal Reserve official John Williams is also due to speak after the close, potentially providing hints on the central bank’s next move on interest rates.

Oil prices remained in focus as they rebounded on concerns about the row between Saudi Arabia and Iran. Saudi Arabia cut ties with Iran on Sunday in response to the invasion of its embassy in Tehran.

At 1435 GMT West Texas Intermediate increased 2.03% to $37.81 per barrel and Brent crude rose 2.8% to $38.36 per barrel.

Company-wise, Tesla Motors fell after its fourth quarter delivery numbers out on Sunday disappointed.

Pharmaceutical company Baxalta was a high riser, amid speculation that London-listed Shire is close to completing a takeover of the group.

In currencies, the dollar was up 0.25% versus the pound, 0.4% stronger against the euro and 1.1% lower versus the yen.

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