Red is very much in fashion on traders’ screens again today, as investors fret over the timing of the long-anticipated increase in US interest rates.
An OECD downgrade of global growth is also weighing on sentiment.
“Reoccurring concerns over the global economy and the most recent developments in emerging market weakness has been a key factor in encouraging the Organization for Economic Cooperation and Development (OECD) to downwardly revise 2015 global forecasts to 2.9%. This has contributed to downward pressures on global markets, to which the recent weak economic data from China has weighed further on market sentiment,” wrote FXTM research analyst Lukman Otunuga this morning.
“Sentiment towards the global economy has received another jab following the weak data from China over the past two days, including another astonishing decline in China imports at 19% and a weaker than expected inflation reading. Falling inflation provides further scope for the People’s Bank of China (PBoC) to unleash further monetary stimulus and expectations remain high that the PBoC will ease policy further,” the analyst added.
Meanwhile, Britain’s Prime Minister, David Cameron, is posturing once again in an attempt to quell the Euroskeptics in his party, and has sent a six-page letter to the president of the European Council, Martin Schulz, detailing a check list of demands if the EU wants Britain to carry on being its best friend forever.
The US government has left little doubt that it would prefer Britain to remain part of the European Union, and the renegotiation process, which is likely to be a drawn out one, may cause some unease with US-based investors.
The three main benchmarks were all in retreat, with the tech-heavy Nasdaq back-pedaling fastest of all, down 37 points (0.7%) at 5,058.
The Dow Jones Average was off 57 points (0.3%) at 17,673 and the S&P 500 was down six (0.3%) at 2,072.
Rackspace Hosting (NYSE:RAX) set the early pace after some eye-catching numbers released after the end of trading on Monday.
The shares were up by about one-sixth at US$31.54, as it revealed third quarter post-tax profits of US$36.5mln, up from US$25.7mln the year before.
Earnings per share rose to 26 cents from 18 cents a year earlier and were six cents ahead of the consensus forecast.
Fashion firm Gap (NYSE:GPS), in contrast, disappointed with its third quarter earnings update after the bell yesterday.
Net sales for the four weeks to the end of October eased to US$1.20bn from US$1.26bn in the corresponding period of last year. Like-for-like sales were down 3% from a year earlier.
Net sales for the third quarter on a constant currency basis were flat year-on-year.
The shares were off 3.9% at US$26.60, less than had looked likely in pre-market trading, as the stock has been given firm support by broker Jefferies and its punchy US$50 price target.
Of today’s results announcers, home builder D.R. Horton (LON:DHI) was wanted after the July-September quarter was net income surge to US$238.1mln, equivalent to 64 cents per share, from US$166.3mln, or 45 cents a share, in the corresponding period of 2014.
The shares rose 2.5% to US$29.54.
Shares in Wayfair (NYSE:W) were under pressure, down 6.3% at US$42.97, despite reduced losses in the third quarter.
The online home-goods retailer’s loss has now narrowed in three consecutive quarters, while revenue in the third quarter grew 77% to US$594mln.