Investors have been rattled this week by data showing U.S. manufacturing and hiring in September were weaker than expected. “The overall health of the U.S. economy could be described as anemic at best,” said Edward Moya of Oanda in a report.
London’s FTSE 100 fell 0.5% in midday trading to 7,088, while France’s CAC 40 gained 0.5% to 5,452. On Wall Street, the future for the benchmark Standard & Poor’s 500 index gained 0.2% while that for the Dow Jones Industrial Average also rose 0.2%.
In Asia, Tokyo’s Nikkei 225 fell by an unusually wide margin of 2% to 21,341.74 while Hong Kong’s Hang Seng ended up 0.3% at 26,110.31. Sydney’s S&P-ASX 200 shed 2.2% to 6,493.00 and India’s Sensex gave up 0.6% to 38,082.82. Benchmarks in Taiwan, New Zealand and Southeast Asia also retreated.
On Wednesday, the S&P 500 lost 1.8% after a survey by payroll processor ADP found hiring weakened in September. Investors saw signs the U.S. economy is “possibly on the verge of a recession,” said Stephen Innes of AxiTrader in a report.
That added to concern about earlier data that showed U.S. manufacturing shrank last month by its widest margin in a decade. Also Wednesday, the World Trade Organization cleared the United States to impose tariffs on up to $7.5 billion of European goods to compensate for illegal subsidies given to aircraft manufacturer Airbus.
The Trump administration said tariffs would begin Oct. 18. A separate WTO ruling found Airbus rival Boeing Co. received similar improper aid from Washington. The EU is expected to rule next year on possible tariffs Europe can impose in response to that.
Markets already were on edge about whether President Donald Trump’s tariff battle with Beijing, which is weighing on trade worldwide, might tip the global economy into recession. U.S. and Chinese negotiators are due to meet this month for a 13th round of talks aimed at ending the fight over Beijing’s trade surplus and technology policies. The two sides have made conciliatory gestures including postponing or lifting some punitive tariffs, but there has been no sign of progress toward settling the core issues in the dispute.
Investors increased their bets the Federal Reserve will slash interest rates at its next meeting to shield the economy from slowing growth abroad and the effects of the trade war. Markets are pricing in a 75% probability the Fed will cut short-term rates by half a percentage point at its Oct. 29-30 meeting. The Fed hasn’t cut rates by that large a margin since the 2008 financial crisis.
ENERGY: Benchmark U.S. crude was unchanged at $52.54 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged 98 cents on Wednesday. Brent crude, used to price international oils, lost 3 cents to $57.66 per barrel in London. It fell $1.20 the previous session to $57.69.
CURRENCY: The dollar declined to 106.92 yen from Wednesday’s 107.19 yen. The euro gained slightly to $1.0967.