Stocks pare losses but economic concerns linger

Traders and financial professionals work at the opening bell on the floor of the New York Stock Exchange (NYSE), January 2, 2019 in New York City. (AFP)
Updated 03 January 2019

Stocks pare losses but economic concerns linger

NEW YORK: Stocks recovered much of their losses on Wednesday as investors took advantage of cheaper shares to ring in the new year, but lingering economic concerns from weak Chinese and European data boosted safe-haven assets including benchmark US Treasury notes and the Japanese yen.

Data showed Chinese factory activity contracting for the first time in more than two years. The Purchasing Managers’ Index (PMI) for the euro zone also reached its lowest level since February 2016, and France’s PMI fell in December for the first time in two years. Concerns about the flagging global economy contributed to US stocks posting a loss in 2018 for the first time in a decade.

The US benchmark S&P 500 stock index dropped as much as 1.6 percent on the data, but moved higher to fluctuate between positive and negative territory as the session continued. Bank and energy shares, which have been especially hard-hit in recent sell-offs, were among the biggest gainers.

Energy shares also benefited from a jump in oil prices, which climbed as US stocks recovered.

“We’re at levels that are really, really oversold, and that’s where bounces really come from,” said Michael Antonelli, managing director of institutional sales trading at Robert W. Baird in Milwaukee. “Slowing China growth isn’t anything new, and that’s what led to today’s bounce.”

Still, MSCI’s gauge of stocks around the globe dropped 0.45 percent. Asian markets as well as the pan-European STOXX 600 closed lower.

Reflecting lingering investor nervousness, yields on US 10-year Treasury notes fell, earlier hitting an 11-month low. However, the boost in oil prices pushed up yields on short-dated maturities, flattening the yield curve. An inverted yield curve is widely seen as an indicator of a future recession.

“The yield curve is signaling that something is wrong,” said Matt Miskin, market strategist at John Hancock Investments in Boston. “The underlying economic data continues to suggest
a slowdown.”

Germany’s Mercedes-Benz plans assembly plant in Egypt

Updated 8 min 11 sec ago

Germany’s Mercedes-Benz plans assembly plant in Egypt

BERLIN: German automaker Daimler’s Mercedes-Benz Cars unit says it is developing plans to open an assembly plant in Egypt.
Mercedes-Benz said in a statement Friday that the passenger car plant would be built by a local business partner and the project is being developed “in close collaboration” with Egypt’s government. It said board member Markus Schaefer recently held “successful discussions” with Egypt’s president and prime minister.
Schaefer described Egypt as “an attractive and competitive location for production and supporting logistics” and said having an assembly plant there would enable Mercedes-Benz to expand its market position.
The company said it is also offering expertise on modern mobility concepts, electric cars and autonomous driving as Egypt develops a new capital and other infrastructure projects, but detailed agreements haven’t yet been reached on that.