Stocks are off to a shaky start this week as investors digested discouraging economic growth expectations from China. The Asian behemoth cut its growth goal down to 7.5%, previously at 8%, which inevitably caused concerns that spilled over onto Wall Street. The Nasdaq led the way lower, shedding 0.86% on the day, while the Dow Jones Industrial Average held its ground best, losing only 0.11%. Gold prices regained a bit of lost ground as equities inched lower. Futures prices for the precious yellow metal settled near $1,705 an ounce as the trading session drew to a close.
News of slower growth in China stole the headlines and economic data releases on the home front took a backseat on Monday. Investors payed little attention to the better-than-expected ISM non-manufacturing index results. Growth in the domestic service sector came in at 57.3%, beating estimates of 55.5%, and surpassing last month’s reading of 56.8%. Factory orders data were disappointing as the figure came in at negative 1%, versus last month’s reading of positive 1.4%. Crude oil futures sank to a low of $105.50 a barrel in overnight trading, only to stage a comeback and settle near $107 a barrel as Wall Street’s closing bell rang.
The Vanguard REIT ETF (NYSEARCA:VNQ) was one of the strongest performers, gaining 1.01% on the day, bolstered by bullish pressures all throughout the trading session. With no major economic or housing market data releases today, it’s hard to pinpoint a fundamental reason for why this ETF was able to trek higher while broad equity indexes drifted lower.
Click to enlarge
The iShares FTSE China 25 Index Fund (NYSEARCA:FXI) was one of the worst performers, shedding 2.73% on the day, as the fund gave into profit-taking pressures right from the opening bell. The Chinese government announced it was lowering its economic growth target from 8% down to 7.5%, with an emphasis on promoting higher-quality growth through internal consumption. This news is by no means terrible, although it certainly was discouraging enough to spark a broad-based sell off across global equity markets. Nonetheless, FXI is up an impressive 12% year-to-date.
Click to enlarge
Disclosure: No positions at time of writing.
Disclaimer: ETF Database is not an investment advisor, and any content published by ETF Database does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. From time to time, issuers of exchange-traded products mentioned herein may place paid advertisements with ETF Database. All content on ETF Database is produced independently of any advertising relationships.