US recession fears fan slide in global stocks

MADRID (ICIS)–US stocks were trading down around 3% mid-morning on Monday, with the major chemical companies posting double-digit falls on growing fears about a recession after the world’s largest economy reported weak economic data.

Falls in the main stocks, however, had moderated by mid-morning although major individual names were still seeing large losses.

The following shows the performance of the major stock indices followed by ICIS.

Index	5 August	Change	%
Dow Jones Industrial Average	38,629.93	1,107.33	2.79%
S&P 500	5,171.95	174.61	3.27%
Dow Jones US Chemicals Index	858.78	21.73	2.47%
S&P 500 Chemicals Industry Index	896.31	21.03	2.29%

Individual names in the US chemical sector were seeing double-digit losses – Trinseo, Ingevity and Chemours – with majors such as Dow and DuPont down around 3% (See table below).

Earlier on Monday, stocks in Asia – with Japan’s benchmark Nikkei 225 posting its largest ever loss – and Europe were also sharply down.

Crude prices also took a hit with the international Brent benchmark down more than $1/barrel to $75.74/barrel.

MANUFACTRING DOWNTURN, WIDER WOES |
A recession will hit the US beleaguered manufacturing sector further – after more than a year in the doldrums compounded by weak data in July.

Employment data last week revealed lower-than-expected job growth and higher unemployment, sparking alarm among global investors about the health of the US economy.

The equity market reaction on Monday was brutal in Asia, but was less pronounced in Europe and in the Americas.

The slowing fall in some US indices on Monday could be linked to the much-awaited services PMI index for July, which showed that the sector is still expanding.

“Economic activity in the services sector expanded in July, a trend that has been interrupted only three times — though twice in the last four months — since early in the coronavirus pandemic,” said the Institute for Supply Management (ISM), which compiles the index.

“The services PMI registered 51.4%, indicating sector expansion for the 47th time in 50 months.”

Any reading above 50% suggests that the sector is in expansion.

Analysts are questioning whether the market reaction had been overblown, with some linking it to possible wild speculative moves in August when market activity slows sharply.

“Weak payrolls [have] really escalated a profound move across the globe. However, the reality is that although payrolls was disappointing it’s hard to know how disappointing given the distortions from Hurricane Beryl. It’s like the market has added up 2+2 and made nine,” said Jim Reid, Deutsche Bank’s global head of economic research.

“It’s easily possible we’ll get the additional three and two to make up the total but we’re certainly not there yet. It’s hard to believe such market moves would have occurred in any other month.”

Symbol	Name	Price	Change	Change %
ASIX	AdvanSix	24.66	-2.60	-9.54%
AVNT	Avient	40.29	-2.54	-5.93%
AXTA	Axalta Coating Systems	33.645	-1.565	-4.44%
BAK	Braskem	5.435	-0.345	-5.97%
CC	Chemours	18.53	-2.01	-9.79%
CE	Celanese	125.31	-6.24	-4.74%
DD	DuPont	76.75	-2.37	-3.00%
DOW	Dow	50.56	-1.45	-2.79%
EMN	Eastman	93.74	-3.75	-3.85%
FUL	HB Fuller	77.225	-3.995	-4.92%
HUN	Huntsman	21.29	-1.19	-5.29%
KRO	Kronos Worldwide	10.28	-0.56	-5.17%
LYB	LyondellBasell	92.42	-1.97	-2.09%
MEOH	Methanex	40.29	-2.74	-6.37%
NEU	NewMarket	528.67	-22.24	-4.04%
NGVT	Ingevity	35.375	-5.825	-14.14%
OLN	Olin	40.785	-2.185	-5.08%
PPG	PPG	119.18	-4.28	-3.47%
RPM	RPM International	114.03	-3.74	-3.18%
SCL	Stepan	73.385	-4.675	-5.99%
SHW	Sherwin-Williams	338.27	-8.98	-2.59%
TROX	Tronox	12.65	-0.66	-4.96%
TSE	Trinseo	2.29	-0.30	-11.58%
WLK	Westlake	131.42	-5.64	-4.11%

Front page picture: A stock exchange in Hangzhou, Zhejiang Province, China; archive image

Source: Costfoto/NurPhoto/Shutterstock