On Monday, US stocks saw their three-day winning streak come to an end and crude prices recorded declines.
This was after economic data from China, Europe, and the United States showed that demand had weakened significantly due to inflation pressures.
Risk appetite remained low because of the looming possibility of the economy sliding into recession.
The trading session on Monday was choppy to say the least, which saw all three major US stock indexes lower modestly on the first day of the month.
This was after the Nasdaq and S&P 500 had recorded their biggest monthly gains in two years. Market analysts said that this was a consolidation.
They said that investors were going to see if the downward trend would continue, or if there would be some follow through.
The purchasing managers’ index (PMI) from the Institute for Supply Management (ISM) showed a deceleration in US factory activity in July, which saw it come down to its lowest since August 2020.
However, it was still in expansion territory and there was an ease in the supply bottlenecks that had been troubling for a while.
This report came after economic data in Asia and Europe showed that there was a contraction in factory activity because of persistent inflation and reduced global demand.
Market analysts said that the data showed the economy was indeed slowing down, but also indicated that demand would not completely collapse.
They said that the market was watching to see if the US Fed would stop raising rates and pull back a little.
There was also some debate about whether the markets had already priced in an economic slowdown or not. A 0.14% decline was recorded in the Dow Jones Industrial Average, which lost 46.73 points to reach 32,798.4.
A 0.28% fall was also seen in the S&P 500, which fell by 11.68 points to reach 4,118.61, while the Nasdaq Composite saw a drop of 0.18%, or 21.71 points to reach 12,368.98.
European markets decline
European stocks were also lower for the day because of the energy sector, after disappointing data from China and the euro zone fueled concerns about weakening global demand and a contraction in the economy.
A 0.19% loss was also recorded in the continent-wide STOXX 600 index and a 0.06% gain was seen in the MSCI’s index of global shares.
There was a 0.06% loss in stocks in emerging markets, while a 0.11% gain was recorded in the MSCI’s index of Asia-Pacific shares with the exception of Japan.
A 0.69% gain was also recorded in Japan’s Nikkei 225 index. As demand outlook was under pressure because of global factory data, crude prices took a hit.
Market participants were also gearing up for the meeting of the OPEC+ this week, which would shed light on the global oil supply.
A 4.73% decline in US crude saw it come down to $93.89 a barrel, while a 3.94% loss in Brent crude brought it down to $100.03 a barrel.