Stock markets worldwide fell on Tuesday after weak Chinese and British factory data rekindled fears of slowing global growth, sending benchmark Treasury yields to nearly two-week lows.
Activity at China’s factories shrank for the 14th straight month in April as demand stagnated, a private survey showed. The data contributed to a drop in oil prices on demand worries, given the country’s status as a major oil importer.
Britain’s manufacturing output last month also unexpectedly shrank to hit its lowest level in three years.
U.S. shares gave back Monday’s gains. The drop in oil prices helped push the S&P 500 energy index .SPNY down 2.5 percent, making it the leading decliner among the 10 major S&P sectors.
“We are reacting to the negative news overnight from China and Europe, and investors are waiting for the jobs data,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh. She was referring to Friday’s U.S. April employment report.
European shares fell to three-week lows, with Germany’s Commerzbank (CBKG.DE) leading the decline after a slump in profits, while the weak Chinese factory data pushed down mining companies. European banking shares .SX7P ended down 3.68 percent.
The worries about the health of the global economy helped push yields lower and boost prices on safe-haven U.S. government debt. A surprise interest rate cut in Australia also raised concerns about central banks’ ability to boost sluggish growth, which in turn contributed to lower U.S. yields.
MSCI’s all-country world equity index .MIWD00000PUS was last down 4.06 points or 1 percent, to 400.11.
The Dow Jones industrial average .DJI was last down 109.19 points, or 0.61 percent, at 17,781.97. The S&P 500 .SPX was down 14.21 points, or 0.68 percent, at 2,067.22. The Nasdaq Composite .IXIC was down 31.09 points, or 0.65 percent, at 4,786.51.
Europe’s broad FTSEurofirst 300 index .FTEU3 ended down 1.74 percent at 1,318.91.
Yields on U.S. Treasuries maturing between five and 30 years hit their lowest levels since April 20, with benchmark 10-year yields US10YT=RR hitting a session low of 1.782 percent. Two- and three-year yields hit their lowest levels in more than two weeks, at 0.742 percent and 0.888 percent, respectively.
“I think people are realizing monetary policy is at its maximum point … and growth doesn’t look like its accelerating,” said Priya Misra, head of global rates strategy at TD Securities in New York.
In addition to concerns over demand, oil prices fell as rising output from the Middle East and North Sea renewed concerns about global oversupply. Brent crude LCOc1 was last down 2.16 percent, at $44.84 a barrel. U.S. crude CLc1 was last down 3.15 percent, at $43.37 per barrel.
The dollar was last down 0.13 percent against the yen at 106.26 yen, near the 18-month low of 105.55 yen JPY=. The yen gained on doubts the Bank of Japan would intervene to stem its dramatic rise, which has undermined attempts to reflate the developed world’s third-biggest economy.
Spot gold prices XAU= fell 0.39 percent, to $1,286.23 an ounce
(Additional reporting by Tanya Agrawal in Bengaluru and Dion Rabouin in New York; Editing by Nick Zieminski)