Stocks sink on fresh signs of China slowdown

©Agence France-Presse

The British pound hit a seven-week high against the dollar on growing hopes a softer Brexit is in the offing

New York (AFP) - World stocks slumped to start the week on Monday as Chinese trade data renewed fears for global growth.

Meanwhile, the British pound hit a seven-week high against the dollar as British Prime Minister Theresa May delivered an upbeat speech on the eve of a key Brexit vote which she is expected to lose, dealers said.

As earnings season kicked off, weak official Chinese trade data showed demand in China and abroad was weaker last month, something that had made stocks swoon during the final quarter of 2018.

China's exports fell 4.4 percent in December from a year earlier, while imports dropped 7.6 percent, reflecting sluggish demand at home and abroad.

"There is a concern that the global economy could slow down. The data for the last few months has supported the fact that the economy is slowing in China and around the globe," Adam Sarhan of 50 Park Investments told AFP.

"The global economy does well when China does well."

Sarhan added that the partial shutdown of the US government was also a worry for investors as it dragged into its fourth week.

"The stock market is concerned because eventually the shutdown will cause a significant slowdown on the economy," he said.

In Britain, Sterling bounced as high as $1.2879, a level last seen in late November, after May issued a last-ditch plea for lawmakers to back her European Union divorce deal on Tuesday.

A surprise for the pound?

On the other hand, the European single currency dropped to 88.96 pence, the lowest level since early December.

"We all have a duty to implement the result of the referendum," May said in an address to factory workers in Stoke, a Brexit-backing city in central England.

The embattled British leader, who is widely expected to lose the House of Commons vote by a considerable margin, said failure to deliver Brexit would be "catastrophic" for British democracy.

XTB analyst David Cheetham said there was a "nagging doubt" investors were discounting the possibility that Britain could crash out of the EU without a deal in place.

"If traders start to fear that it could realistically happen once more then the pound is vulnerable to a swift swoon lower," he said.

Meanwhile, London's benchmark FTSE 100 stocks index sank 0.9 percent, while Paris shed 0.4 percent and Frankfurt gave up 0.3 percent.

In Asia, Hong Kong stocks spearheaded a sell-off as profit-takers also moved in following a six-day rally.

China's customs bureau also said the trade surplus with the United States -- a major source of anger for President Donald Trump -- had widened by 17.2 percent last year as US companies rushed to buy goods ahead of more tariff hikes.

 - Key figures around 2100 GMT - 

New York - Dow: DOWN 0.4 percent at 23,909.85 (close)

New York - S&P 500: DOWN 0.5 percent at 2,582.61 (close)

New York - Nasdaq: DOWN 0.9 percent at 6,905.92 (close)

London - FTSE 100: DOWN 0.9 percent at 6,855.02 points (close)

Frankfurt - DAX 30: DOWN 0.3 percent at 10,855.91 (close)

Paris - CAC 40: DOWN 0.4 percent at 4,762.75 (close)

EURO STOXX 50: DOWN 0.5 percent at 3,055.18 (close)

Hong Kong - Hang Seng: DOWN 1.4 percent at 26,298.33 (close)

Shanghai - Composite: DOWN 0.7 percent at 2,535.77 (close)

Tokyo - Nikkei 225: Closed for a public holiday

Euro/pound: DOWN at 89.12 pence from 89.31 pence at 2200 GMT

Pound/dollar: UP at $1.2870 from $1.2844

Euro/dollar: FLAT at $1.1469

Dollar/yen: DOWN at 108.17 yen from 108.48 

Oil - Brent Crude: DOWN $1.49 at $58.99 per barrel

Oil - West Texas Intermediate: DOWN $1.08 cents at $50.51

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