Select Page

Last week I posted a video arguing that, again, U.S. stocks were the only game in town with both the Chinese and European Union economies sputtering.

The market action today, September 5, showed, however, that even if the U.S. economy is leading the world with solid if not spectacular growth, U.S. stocks will still feel the pain of bad news from the world’s two other big economies.

Today U.S. stock indexes fell on new data from China showing continuing weakness in that economy and indicated that a turnaround is still a way down the road.

Which news took emerging market currencies and stocks down around the world. The Morgan Stanley index of developing currencies fell 0.5%, as currencies dropped with China’s yuan. The iShares MSCI Emerging Markets ETF (EEM), retreated 0.81% on the day.

The specific bad news from China was a private purchasing managers survey for the service sector that showed activity expanded in August at the slowest pace this year. The good news, such as it was, had Chinese property developer Country Garden Holdings Co. making coupon payments on two dollar bonds within grace periods, avoiding its first default.

Yes, things are that stressed in China’s real estate sector that a developer avoiding default is good news.

Wall Street stocks inched down on Tuesday with the Standard & Poor’s 500 index down about 0.4%, and the Dow Jones Industrial Average off around 0.6%. The tech-heavy Nasdaq Composite was at close to zero on the day.

Meanwhile, WTI crude oil ended the day at nearly $87 a barrel, its highest close since November 2022, on news of supply cuts from Saudi Arabia and Russia. Oil prices are now up almost 25% from June even as forecasts point to a global growth slump.