U.S. stock futures drop ahead of jobs data as gloomy China trade report adds to global growth fears – MarketWatch

U.S. stock futures drop ahead of jobs data as gloomy China trade report adds to global growth fears – MarketWatch

U.S. stock futures fell on Friday, pointing to a fifth straight session of losses for Wall Street, after a slump in Chinese exports piled onto concerns about slowing global growth.

Investors are also braced for U.S. jobs data due later.

How did major indexes fare?

Dow Jones Industrial Average futures

YMM9, -0.47%

fell 98 points, or 0.4%, to 25,405, while S&P 500 futures

ESM9, -0.44%

were down 10.6 points, or 0.4%, to 2,744.50. Nasdaq-100

NQH9, -0.57%

 futures dropped 37 points, or 0.5%, to 7,019.

On Thursday, the Dow Jones Industrial Average

DJIA, -0.78%

 fell 200.23 points, or 0.8%, to 25,473.23. The S&P 500 index

SPX, -0.81%

dropped 0.8% to 2,748.93 and the Nasdaq Composite Index

COMP, -1.13%

 shed 1.1%, to 7,421.46.

With one session left, the Nasdaq is facing a 2.2% drop for the week, while the Dow industrials and S&P 500 are off around 2% each.

What’s driving the market?

Tumbling 4.4%, Chinese stocks logged their worst one-day percentage drop since October on Friday, after the nation reported a 20% drop in February exports on the heels of a 9.1% gain in January. Officials attributed the plunge to sagging demand and some distortions from the Lunar New Year holiday. But economists said that even adding those two months together, the data looked weak.

And China’s biggest brokerage, Citic Securities, hit People’s Insurance Group of China

601319, -9.98%

 with a rare sell rating, citing concerns over valuations, according to Reuters. Those shares slid 4% in Hong Kong, after falling as much as 10% at one point.

China’s news adds to global growth concerns, with investors still reeling from a more dovish-than-expected European Central Bank, which announced new measures to support a slowing economy on Thursday. That included fresh long-term loans to European financial institutions and a surprise pledge to hold off on any interest-rate increases until at least the end of the year.

Read: Why the ECB’s surprise policy moves sent a shiver through global stock markets

Other data on Friday showed German manufacturing orders fell sharply in January, though December data was revised upward.

Investors are also bracing for U.S. jobs data Friday, with February nonfarm payrolls due at 8:30 a.m. Eastern Time, alongside the unemployment rate and average hourly earnings. Economists polled by MarketWatch are forecasting the creation of 178,000 new jobs, and a downward revision for January’s 304,000 spike.

And uncertainty was lingering over a U.S.-China trade deal. Washington and Beijing have yet to set a date for a summit to resolve their trade dispute, the U.S. ambassador to China, Terry Branstad, said in an interview with The Wall Street Journal. Branstad said negotiators need to further narrow the gap in their positions, including over enforcement of a potential deal, before any summit arrangements are made.

Read: U.S. ambassador to China says no date yet for summit, trade deal not ‘imminent’

How did other markets trade?

Asian stocks closed lower across the board, led by that big loss for the Shanghai Composite

SHCOMP, -4.40%

 and a 2% drop for the Nikkei 225

NIK, -2.01%

Investors sought shelter in perceived safe haven assets such as the Japanese yen

USDJPY, -0.37%

which weighed on the U.S. dollar

DXY, -0.12%

Gold prices

GCJ9, +0.53%

 also benefited.


CLJ9, -1.71%

prices fell along with equities.

European stocks tracked global equities lower, with the Stoxx Europe 600 index

SXXP, -0.76%

falling 0.5%.

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China’s exports fall more than 20% in February; overall trade data come in much weaker – CNBC

China’s exports fall more than 20% in February; overall trade data come in much weaker – CNBC

A Chinese flag flies on a vessel moving past shipping containers being unloaded at a Tianjin Port Group Co. dock in Tianjin, China.

Nelson Ching | Bloomberg | Getty Images

A Chinese flag flies on a vessel moving past shipping containers being unloaded at a Tianjin Port Group Co. dock in Tianjin, China.

China on Friday reported worse than expected trade data for the month of February, customs data showed amid Beijing’s trade dispute with the U.S.

Although the 20.7 percent decline in Chinese exports for the month of February was a “big number” and the market will be “clearly disappointed,” the negative number should not come as a surprise as investors have been expecting a slowdown both globally and in China, said Sarah Lien, director and client portfolio manager at Eastspring Investments.

“There are a lot of headwinds; there’s a lot of moving parts in market,” Lien told CNBC.

Analysts have been warning of an impending slowdown in Chinese exports even though overall economic data out of the country has been robust for the last year. Asia’s largest economy continues to negotiate through a trade dispute with the U.S., its largest trading partner. Exports held up for much of 2018 as many exporters were rushing to ship their goods out before heavier tariffs hit.

According to sources who spoke to CNBC, Washington and Beijing appear to be approaching the finish line on trade negotiations that could end later this month.

Holiday distortion, but outlook still gloomy

Analysts also caution that data from China at the beginning of the year may be distorted by week-long Chinese New Year public holidays, which started in early February this year. In 2018, Chinese New Year holidays started in mid-February.

But, February’s China trade data were “downbeat, even accounting for seasonal distortions,” said Julian Evans-Pritchard, senior China economist at Capital Economics.

“The upshot is that today’s downbeat data provide further evidence that global demand is cooling and remains consistent with subdued domestic demand,” Evans-Pritchard wrote in a note on Friday.

“A row back in U.S. tariffs would provide a mild boost to exports but not enough to offset the broader external headwinds. Meanwhile, with policy stimulus unlikely to put a floor beneath growth until the second half of the year, imports will remain under pressure in the near-term,” he added.

Despite concerns of a deceleration in Chinese growth, Eastspring is bullish on the world’s second-largest economy as there are “a lot of ways to play China,” Lien said.

She said the Chinese domestic market is one Eastspring is focused on.

“The domestic economy is a hugely growing and large part of the market, there’s plenty of opportunities there,” she said.

China is currently in the midst of a two-week annual parliamentary meeting, the National People’s Congress, which kicked off on Tuesday and ends next Friday (Mar. 5-15).

At the opening of that meeting this week, Premier Li Keqiang said the Chinese economy will likely slow this year, and revealed that the official economic growth target for 2019 will be 6 to 6.5 percent. That compares to an expansion of 6.6 percent in 2018 — which was already China’s slowest pace of growth since 1990.

—Reuters contributed to this report.

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