Markets Right Now: Stocks sink on China slowdown fears

Markets Right Now: Stocks sink on China slowdown fears

Quincy Krosby, Prudential Financial chief market strategist, said that companies blaming poor earnings reports on China is a valid reason for concern in the U.S. markets.

"Parallel to the trade truce with China informally reached in December, the temporary reprieve on the government shutdown announced on Friday afternoon removes immediate risk from the landscape without taking away an overhang of concern for the markets", said John Stoltzfus, head of investment strategy at Oppenheimer Equity Research.

In Asia Pacific, which accounts for about 22 per cent of Caterpillar revenues, the company is hoping for growth outside China as construction equipment sales in the world's second largest economy are expected to be flat this year.

West Texas Intermediate oil futures fell 1.7 per cent to US$52.78 a barrel.

China's economy cooled in the fourth quarter under pressure from faltering domestic demand and bruising US tariffs, dragging 2018 growth to the lowest level in almost three decades.

The country last week reported its weakest annual growth since 1990.

Warnings from Caterpillar and Nvidia on Monday about weakening demand from China signal investors could see more profit shortfalls from USA companies that count on the world's No. 2 economy for a big portion of their business.

Demand for Chinese exports faded past year and the International Monetary Fund said it expects China's growth to decelerate again in 2019.

Facebook paid users to track smartphone use
The Facebook Research app looks to be Onavo Protect in a new form, with the data-protection feature replaced by a monthly payment. The report suggested it may have been in violation of Apple's policies around data privacy and usage.

The South Korean company has been losing share for its smartphones for years in China, but the slowdown there is now threatening to hurt its crucial chips business.

"The construction firm's disappointing fourth-quarter results was an very bad way to kick off a hugely important period for company updates, and translated to a woeful start for the Dow Jones, which swiftly shed around 350 points".

But the company said higher material and freight costs due to tariffs, steel prices and supply chain inefficiencies also affected its results.

"The trade and growth uncertainties surrounding markets over the past few months has started to materialise and Trump's radical trade policy has resulted in adverse economic impact to even the American companies", Yang said in a note.

Apple CEO Tim Cook said in a letter to shareholders this month that demand for iPhones is waning and revenue for the last quarter of 2018 will fall well below projections, a decrease he traced mainly to China. The chipmaker said "deteriorating macroeconomic conditions, particularly in China", impacted demand for its graphics processing units. Adjusted earnings per share grew 18.1% to $2.55, but fell well below the $2.99 analyst consensus.

Last year, the construction equipment company lost $1.3 billion in the quarter, or $2.18 per share, but at that time it was dragged down by an enormous charge related to tax reform. Revenue increased 11.2% to $14.34 billion, in line with expectations.

Earnings in 2019 will be US$10.45 to US$10.90 per share, down 15 cents from the prior range, the company said. Caterpillar shares sank 9.13 percent when it issued lower-than-expected profit targets for 2019.

Related Articles