US open: Stocks fall after worse-than-estimated China PMIs

US stocks fell on Tuesday after Chinese manufacturing data came in worse than anticipated.

At 1446 BST, the Dow Jones Industrial Average fell 0.81%, the S&P 500 dropped 0.80% and Nasdaq declined 0.85%.

China’s official manufacturing purchasing managers’ index dropped to 50.1 in April from 50.2 in March, the National Bureau of Statistics revealed, missing economists’ estimates of 50.4. However it was above the 50 level that separates an expansion from a contraction.

The Caixin PMI on China manufacturing contracted further to 49.4 in April from 49.7 in March, according to Markit, below forecasts of 49.9.

“With the Caixin reading focusing on SME’s, it is clear that while large firms are feeling the benefits of government spending and increasingly expansionary policies at the PBoC, the smaller firms remain exposed to slowing growth and trade,” said Joshua Mahony, market analyst at IG.

At the same time, the Reserve Bank of Australia’s decision to cut interest rates to a record low of 1.75% also weighed on sentiment.

Mike van Dulken, head of research at Accendo Markets, said it “will surely only go to fuel fears of another round of ‘currency wars’ as nations fight for that competitive edge via currency weakness”.

Meanwhile, oil prices retreated amid concerns about oversupply. West Texas Intermediate was down 1.35% to $44.18 a barrel while Brent crude was 0.89% weaker at $45.47.

Among corporate stocks, Pfizer rallied after reporting first quarter revenue that beat analysts’ estimates, bolstered by sales of its new treatments for cancer and its Hospira acquisition.

Estee Lauder slumped after announcing plans to cut its workforce by 900 to 1,200 positions globally as it reported a drop in first quarter profit.

Halliburton was under the cosh as it reported a wider quarterly loss, reflecting a fall in revenue at its North American business due to lower energy prices and charges from its failed tie-up with Baker Hughes Inc.

There are no major US data releases scheduled but market participants will turn their attention to Cleveland Fed President Loretta Mester who is due to appear on a panel at an Atlanta Fed conference at 1530 BST.

In currencies, the dollar rose 0.43% against the pound, fell 0.21% versus the euro and dropped 0.43% against the yen.