By Caroline Valetkevitch
NEW YORK (Reuters) – World equity indexes dropped on Monday as disappointing trade data in world No. 2 economy China stoked concerns over weakening global growth, while oil prices slipped.
All three major U.S. stock indexes were down more than 1 percent, while European shares closed 1.1 percent lower.
Fresh builds at the delivery point for U.S. crude futures also dragged down oil prices, offsetting bullish OPEC demand projections.
Data showed China’s October exports fell for a fourth month, while imports also dropped, leaving the nation with a record high trade surplus of $61.64 billion. The United States is one of China’s biggest trade partners.
Also not boding well for world growth, the Organization for Economic Co-operation and Development cut its 2015 global growth forecast again. But it said the U.S. Federal Reserve should raise interest rates as the U.S. economic recovery gains steam.
Recent data showing robust U.S. job growth has boosted bets for a long-anticipated December rate hike by the Fed.
“Market participants are of the view (after strong U.S. jobs data on Friday) that the worries about the global economy are overdone but then this weekend we saw some disappointment in the China exports,” said Emile Cardon, a strategist at Rabobank in the Netherlands.
The Dow Jones industrial average fell 229.76 points, or 1.28 percent, to 17,680.57, the S&P 500 lost 28.97 points, or 1.38 percent, to 2,070.23 and the Nasdaq Composite dropped 75.98 points, or 1.48 percent, to 5,071.14.
Growth sectors, including energy and consumer discretionaries, led the decline.
“We’ve had a rally up, and I think we’re just about done for now, at least for the next couple of weeks,” said Gary Kaltbaum, president of Kaltbaum & Associates in Orlando, Florida.
MSCI’s all-country world index fell 1.0 percent, while European shares closed down 1.1 percent.
Shares in Portugal, where an agreement between leftist parties to work together to form a government unnerved investors, led the European market lower.
In the oil market, Brent crude for December delivery was down 28 cents at $47.14 a barrel, while December U.S. crude fell 46 cents to $43.83 after falling nearly 5 percent last week.
A report saying the European Central Bank was forming a consensus to cut its deposit interest rate further into negative territory caused the euro to slip against the dollar.
The euro had risen from its Friday lows, when it had fallen to $1.07045, its weakest since mid-April. But then it slipped back to trade at $1.0742.
U.S. Treasuries prices extended recent losses as traders raised bets the Fed will raise rates in December.
Benchmark 10-year Treasuries notes were down 3/32 in price with a yield of 2.345 percent. The 10-year yield earlier touched 2.377 percent, which was the highest intraday level since July 21, according to Reuters.
“People are really buying into the December rate-hike story,” said Gennadiy Goldberg, interest rates strategist at TD Securities in New York.
(Additional reporting by Marc Jones in London, and Dion Rabouin, Richard Leong and Barani Krishnan in New York and Abhiram Nandakumar in Bengaluru; Editing by Bernadette Baum and Nick Zieminski)