SEOUL, South Korea – Global stocks were mostly lower Tuesday as oil extended losses following a 6-per cent plunge that was sparked by data showing a manufacturing slowdown in the world’s two largest economies.
KEEPING SCORE: Europe started lower, with Britain’s FTSE 100 down 1.2 per cent to 5,985.97. Germany’s DAX fell 1 per cent to 9,656.78 while France’s CAC 40 slipped 1.4 per cent to 4,331.20. Futures augured a weak start for Wall Street. Dow futures fell 0.7 per cent and S&P 500 futures declined 0.8 per cent.
SLOWING MANUFACTURING: The Institute for Supply Management said on Monday that U.S. factory activity shrank in January for a fourth straight month as a strong dollar and weak demand overseas pinched American manufacturers. The ISM’s manufacturing index followed a survey showing a slowdown in China’s manufacturing. China’s official survey found that manufacturing fell to its lowest level in more than three years.
OIL SLIDE: The two reports sent the price of oil sharply lower. Benchmark U.S. oil was down 56 cents to $31.06 per barrel in electronic trading on the New York Mercantile Exchange. On Monday, the price of U.S. benchmark oil plunged $2, or 5.9 per cent, to $31.62 a barrel in New York. Brent crude was down 49 cents to $33.76 in London.
ANALYST’S TAKE: “Manufacturing is (the) leading edge of a global growth slowdown,” Tim Condon, head of Asia research at ING, said in a daily report. “We think the 50 per cent crash in global oil prices in the second half of 2014 caused the manufacturing slump by crushing commodity producers’ spending. However, we also think that in 2015 weaker manufacturing, especially in China, began to drive down oil prices. The negative feedback loop is causing severe strains.”
ASIA’S DAY: Tokyo’s Nikkei 225 finished 0.6 per cent lower at 17,750.68 and South Korea’s Kospi fell 1 per cent to 1,906.60. Hong Kong’s Hang Seng declined 0.8 per cent to 19,446.84. Australia’s S&P/ASX 200 dropped 1 per cent to 4,993.30. Stocks in Taiwan, Singapore, Indonesia and the Philippines also were lower. But the Shanghai Composite in mainland China rose 2.3 per cent to 2,749.57.
CURRENCIES: The dollar fell to 120.63 yen from 120.95 yen on Monday. The euro strengthened to $1.0918 from $1.0900.