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Home / Business / Dow loses 200 points amid concerns over profits and geopolitics

Dow loses 200 points amid concerns over profits and geopolitics



  A trader works on the New York Stock Exchange (NYSE) floor in New York, USA,

Victor J. Blue | Bloomberg | Getty Images

A trader works on the floor of the New York Stock Exchange (NYSE) in New York, USA.

"However, there are challenges we must face today, including rising interest rates, the midterm elections and US-China trade tensions," said Jeremy Siegel, a longtime stockbroker and professor at the Wharton School. "I look flat" for the coming year, he added.

Investors are also struggling with increasing geopolitical tensions. A Saudi official delivered a new report on the death of journalist Jamal Khashoggi this weekend. It said a team of 15 Saudi nationals had been sent to confront Khashoggi and threaten to drug and abduct him. Khashoggi was then killed in a stranglehold when he resisted. This departs from a previous official statement by Saudi Arabia stating that Khashoggi died in a fistfight at the Saudi consulate in Istanbul.

Khashoggi's death has led to global criticism of Saudi Arabia and triggered effects on global markets. Last week foreign investors reportedly sold more than $ 1 billion worth of Saudi equities.

In Europe, Moody & # 39; s downgraded its rating for Italian debt, but kept the outlook stable. At the weekend, Italian Finance Minister Giovanni Tria said he was looking forward to "constructive" talks with the European Union on their budget. Italian bonds had sold off amid worries about the Italian budget, but on Monday they rallied strongly.

U.S. Shares rose substantially after a massive rally in Chinese equities the day before.

The Shanghai Composite rose more than 4 percent and recorded its best day since 2 March 2016. The sharp rise comes after Chinese authorities have pledged to support China's economy and offset the negative impact of US tariffs. They made that promise after reporting slower-than-expected economic growth for the second quarter.

"A slowdown in growth could put China on the defensive in the trade negotiations, especially in relation to a growing US economy above the trend," said Katie Nixon, CIO of Northern Trust Wealth Management. "Trade is a central investment risk, and resolving the dispute with China may prove to be a brake in the foreseeable future."

Chinese shares are still in sharp decline despite the weak Monday's downturn this year. The Shanghai Composite fell 20 percent in 2018 and fell 21.4 percent last year.

-CNBC
Ryan Browne
contributed to this report.


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