A drop in Chinese manufacturing activity last month spooked investors

New York (AFP) - Stock markets wobbled Wednesday as data reinforced worries about a stuttering Chinese economy, although a rally in oil and petroleum-linked equities allowed Wall Street to notch modest gains.

Hong Kong’s main stocks index led the losses on the first trading day of 2019, tumbling 2.8 percent, while Shanghai shed more than one percent after two indicators showed Chinese manufacturing activity shrank in December.

The readings were both around lows not seen since 2017 and are the latest to highlight problems in the world’s number two economy, as Beijing struggles with the US trade war while also trying to address a dangerously high debt mountain.

Later Wednesday after the US market closed, Apple signaled more weakness in China, trimming its revenues forecast due to slowing performance in China.

“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Apple Chief Executive Tim Cook said in a letter to investors.

- Support from oil -

Asia’s losses initially fed through into Europe and the United States but both London and Frankfurt closed the day with small gains.

After a weak open, Wall Street poked in and out of positive territory throughout the day before also ending with modest gains.

Support came from a Bloomberg News report of Saudi Arabian oil production cuts that lifted oil prices and petroleum-linked equities.

“Bruised by the volatility of the fourth quarter of 2018, investors aren’t yet grabbing the chance to buy the dip with both hands but it is at least encouraging to see a continuation of the move higher instead of the relentless selling of the past few weeks,” said Chris Beauchamp, chief market analyst at online trading house IG.

Both the euro and the dollar hit fresh multi-month lows against the Japanese yen, traditionally a “safe haven” currency that rises when investors are on edge.

US stocks are coming off of the worst year in a decade and the worst December for the S&P 500 since 1931, a distinction that has troubled President Donald Trump, who had previously touted a series of stock market records as evidence of his effectiveness.

Trump called the December pullback as a “glitch” during a Cabinet meeting on Wednesday, predicting the market would surge after a trade deal is reached with China. Talks with Beijing are “coming along very well,” he said.

But IHS Markit said the stock market decline was a factor in cutting its forecast for US growth for 2019 through 2022. And IHS said in a note it could cut forecasts further if the US government shutdown drags on.

Among individual companies, shares of Tesla Motors dived 6.8 percent after the electric car maker delivered fewer vehicles than expected in the fourth quarter.

- Key figures around 2130 GMT -

New York - Dow: UP 0.1 percent at 23,346.24 (close)

New York - S&P 500: UP 0.1 percent at 2,510.03 (close)

New York - Nasdaq: UP 0.5 percent at 6,665.94 (close)

London - FTSE 100: UP 0.1 percent at 6,734.23 (close)

Frankfurt - DAX 30: UP 0.2 percent at 10,580.19 (close)

Paris - CAC 40: DOWN 0.9 percent at 4,689.39 (close)

EURO STOXX 50: DOWN 0.3 percent at 2,993.18 (close)

Hong Kong - Hang Seng: DOWN 2.8 percent at 25,130.35 (close)

Shanghai - Composite: DOWN 1.2 percent at 2,465.29 (close)

Tokyo - Nikkei 225: Closed for public holiday

Euro/yen: DOWN at 124.26 from 125.87 yen at 2200 on Monday

Dollar/yen: DOWN at 109.10 yen from 109.74 yen

Euro/dollar: DOWN at $1.1346 from $1.1465

Pound/dollar: DOWN at $1.2611 from $1.2740

Oil - Brent Crude: UP $1.11 at $54.91 per barrel

Oil - West Texas Intermediate: UP $1.13 at $46.54 per barrel