U .S. stocks opened sharply lower on Friday as weak economic data from China and Europe exacerbated global growth fears and added to nerves over the U.S.-China trade talks.
The Dow Jones Industrial Average fell 189.34 points, or 0.77 per cent, at the open to 24,408.04.
The S&P 500 opened lower by 20.86 points, or 0.79 per cent, at 2,629.68. The Nasdaq Composite dropped 83.96 points, or 1.19 per cent, to 6,986.37 at the opening bell.
Canada’s main stock index also opened lower on Friday as energy stocks fell tracking weak oil prices after China reported slower economic growth.
The Toronto Stock Exchange’s S&P/TSX composite index was down 116.11 points, or 0.79 per cent, at 14,634.24.
Investors also shrugged off news that Beijing would suspend additional tariffs on U.S.-made vehicles and auto parts for three months starting Jan. 1 and data that core U.S. retail sales accelerated in November.
“Focus has shifted from just the U.S.-China trade war to what’s going on in the global economy and what that means for earnings for the U.S. corporations in the 2019,” said Art Hogan, chief market strategist at B. Riley FBR in New York.
“When you have slowdown in both China and Europe, whether they are related or not, it will impact the sales of S&P 500 companies.”
Adding to the economic gloom, a Reuters poll showed that the risk of a U.S. recession in the next two years has risen to 40 per cent, while expectations of interest rate hikes by the Federal Reserve has slumped for 2019.
Stocks worldwide tumbled on Friday after weak economic data from China and Europe fanned concerns of a global economic slowdown and left investors fretting over the wider impact of a still-unresolved Sino-U.S. trade dispute.
The MSCI All-Country World Index, which tracks stocks across 47 countries, was down over half a per cent by afternoon in Europe.
Euro zone business ended the year on a weak note, expanding at the slowest pace in over four years as new order growth all but dried up, hurt by trade tensions and violent protests in France, a survey showed.
Another survey showed French business activity plunged unexpectedly into contraction this month, retreating at the fastest pace in over four years in the face of violent anti-government protests.
Germany’s private sector expansion slowed to a four-year low, meanwhile, suggesting growth in Europe’s largest economy may be weak in the final quarter.
The data out of Europe added to weak readings from China, where November retail sales grew at the weakest pace since 2003 and industrial output rose the least in nearly three years, underlining risks to the economy as Beijing works to defuse a trade dispute with the United States.
Stock markets in Europe fell sharply, with Germany’s DAX index falling by as much as 1-1/2 per cent. It was last down 0.8 percent. The pan-European STOXX 600 index was last down 0.8 per cent, after falling over 1 per cent earlier.
“The data this morning out of France really hasn’t helped the mood. You look at China data, you look at the flash PMIs out of France and Germany and they’ve really sort of reinforced concerns that the global economy is slowing down,” said Michael Hewson, chief markets analyst at CMC Markets in London.
“Ultimately, I think it rather questions the wisdom of the ECB ending its asset purchase programme at the end of this month. You’ve got Mario Draghi basically tightening into a downturn.”
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.5 per cent. Japan’s Nikkei, also dragged down by the country’s weak tankan sentiment index, dropped 2.0 per cent.
China’s benchmark Shanghai Composite and the blue-chip CSI 300 closed down 1.5 per cent and 1.7 per cent, respectively, and Hong Kong’s Hang Seng was off 1.5 pe rcent.
A Chinese statistics bureau spokesman said the November data showed downward pressure on the economy is increasing.
“The market’s softer after Chinese retail sales. They’re still quite stellar growth, they were lower than expected and enough to concern the market,” said Edward Park, investment director at Brooks Macdonald.
The Chinese yuan weakened 0.4 per cent to 6.9020 per dollar in offshore trade following the data.
U.S. corporate earnings due next month could throw a spotlight on the impact from the U.S. tariffs on imports from China, while there is risk of a government shutdown and further political stalemate in a divided U.S. congress, Kuramochi added.
In the currency market, the euro was down 0.7 per cent after the weak PMIs, last changing hands at $1.1293.
Sterling fell more than half a percent to below $1.26 after Prime Minister Theresa May returned from a visit to Brussels, where she failed to win assurances from European Union leaders over her Brexit withdrawal agreement.
The European Union has said the agreed Brexit deal is not open for renegotiation even though its leaders on Thursday gave May assurances that they would seek to agree a new pact with Britain by 2021 so that the contentious Irish “backstop” is never triggered.
The dollar stood at 113.61 yen, down 0.1 per cent on the day but above this week’s low of 112.245 set on Monday.
Oil prices slipped on Friday after China reported slower economic growth, pointing to lower fuel demand in the world’s biggest oil importer, although market sentiment was supported by supply cuts agreed last week by major crude producers.
Brent crude was down 30 cents at $61.15 per barrel, on course for a decline this week of around 0.7 per cent. U.S. light crude was 30 cents lower at $52.28.
“The energy complex is on the back foot this morning as a batch of soft Chinese economic data triggers a flurry of pre-weekend profit-taking,” PVM Oil analyst Stephen Brennock said.
“This pullback provides a timely reminder that current levels of upside potential are meek at best.”
Cryptocurrency Bitcoin fell as low as $3,200, a fresh 15-month low.
A rash of bomb threats were emailed on Thursday to hundreds of businesses, public offices and schools across the United States and Canada demanding payment in cryptocurrency, but none of the threats appeared credible, law enforcement officials said.