NEW YORKWorld equity indexes dropped on Monday as disappointing trade data in world No. 2 economy China stoked concerns over weakening global growth, while oil prices extended losses for a fourth day.
All three major U.S. stock indexes fell about 1 percent, while European shares closed 1.1 percent lower.
Fresh builds of supply at the delivery point for U.S. crude futures also dragged down oil prices, offsetting bullish OPEC demand projections.
Data showed China’s October exports fell for a fourth month, while imports also dropped, leaving it with a record high trade surplus of $61.64 billion. The United States is one of China’s biggest trade partners.
Also not boding well for world growth, the Organisation for Economic Co-operation and Development cut its 2015 global growth forecast again. But it said the Federal Reserve should raise interest rates as the U.S. economic recovery gains steam.
Recent economic data including Friday’s U.S. jobs report has boosted bets for a December rate hike by the Fed, and that has added to volatility in U.S. stocks.
“There are short-term, myopic concerns about a Fed rate hike,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.
“Bond and stock prices will decline when the Fed makes that first announcement, but, ultimately, stocks will thrive because it will prove the U.S. economy is healthy enough to stand on its own,” Dollarhide said.
The Dow Jones industrial average .DJI fell 179.85 points, or 1 percent, to 17,730.48, the S&P 500 .SPX lost 20.62 points, or 0.98 percent, to 2,078.58 and the Nasdaq Composite .IXIC dropped 51.82 points, or 1.01 percent, to 5,095.30.
Growth sectors, including energy and consumer discretionaries, led the decline.
“Market participants are of the view (after strong U.S. jobs data on Friday) that the worries about the global economy are overdone but then this weekend we saw some disappointment in the China exports,” said Emile Cardon, a strategist at Rabobank in the Netherlands.
MSCI’s all-country world index .MIWD00000PUS fell 0.8 percent, while European shares .FTEU3 closed down 1.1 percent. Shares in Portugal, where an agreement between leftist parties to work together to form a government unnerved investors, led the European market lower.
Brent crude for December delivery LCOc1 fell 23 cents to settle at $47.19 a barrel, while December U.S. crude CLc1 fell 42 cents to settle at $43.87 after falling nearly 5 percent last week.
Investors took profits on the greenback’s surge last week, causing the dollar to fall against major currencies.
The dollar index .DXY, which measures the greenback against a basket of major currencies, fell 0.2 percent on Monday to 98.962.
Gold edged up modestly, snapping an eight-day losing streak as the dollar retreated. Spot gold XAU= was up 0.2 percent at $1,090.20 an ounce.
U.S. Treasuries prices dipped, with two-year yields hovering at their highest in 5-1/2 years, as expectations of a December rate hike increased.
Benchmark 10-year Treasuries notes US10YT=RR were down 3/32 in price with a yield of 2.322 percent, up 1 basis point from late on Friday. The two-year Treasuries yield US2YT=RR was little changed at 0.886 percent.
“People are really buying into the December rate-hike story,” said Gennadiy Goldberg, interest rates strategist at TD Securities in New York.
(Additional reporting by Marc Jones in London, Dion Rabouin, Richard Leong and Barani Krishnan in New York and Noel Randewich in San Francisco; Editing by Nick Zieminski and James Dalgleish)