The major U.S. stock indexes were hit hard on Friday with the selling driven by weaker-than-expected economic data in China and the Euro Zone, which raised concerns over a global economic slowdown. Perhaps softening the negative tone ever so slightly were positive developments in the on-going trade dispute negotiations between the U.S. and China.
China, Euro Zone Data Disappoint
The selling began in Asia early Friday after China reported industrial production and retail sales growth numbers for November which failed to meet expectations. The data served as the latest signs of a weakening economy in China. Furthermore, it exposed the risks that China is facing as it continues to battle the United States in their ongoing trade war.
China reported that industrial output grew by a modest 5.4 percent in November on a year-over-year basis, the slowest pace in almost three years. Additionally, retail sales in the world's second largest economy, grew at their slowest rate in 15 years.
Economic conditions also worsened in the Euro Zone. The IHS Markit Flash Euro Zone PMI Index fell to 51.7 in December, its lowest level in four years. "New business inflows almost stalled, job creation slipped to a two-year low and business optimism deteriorated," IHS Markit said in a release.
U.S. Cash Market Performance
In the cash market, the benchmark S&P 500 Index settled at 2599.95, down 50.59 or -1.91%. The blue chip Dow Jones Industrial Average closed at 24100.51, down 496.87 or -2.03% and the tech-based NASDAQ Composite finished the session at 6910.67, down 159.66 or 2.20%.
Trade Dispute Tensions Soften
As far as U.S.-China relations were concerned, there were a couple of bright spots, but they weren't strong enough to offset the weaker-than-expected data out of China and the Euro Zone.
Hopes were raised that the two economic powerhouses would soon strike a permanent deal on trade when China announced on Friday it would suspend an additional tariff on U.S. autos. It also confirmed it would reduce a 40-percent charge on U.S. auto imports to 15 percent for 90 days. In announcing the tariff suspension, China said it hoped the two sides would speed negotiations.
Additionally, earlier in the week, China bought U.S. soybeans for the first time since the trade war between the two countries started in July. U.S. officials hailed China's purchase of 1.13 million tonnes of U.S. soybeans as a "great step" - but said it remained uncertain if a broader deal would follow.
This article was originally posted on FX Empire
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