Stocks Open Lower After Strong Friday Close
The US stock markets opened lower this morning as China’s stimulus outlook weakened and the frenzy over Alibaba tempered.
Monday, September 22, 2014
The Dow dropped 0.2% while the Nasdaq and S&P 500 both fell 0.4%, according to Market Watch. The losses followed Friday’s mixed but generally strong results, with the S&P 500 tallying its eighteenth record close of 2014.
Chinese optimism wanes
The Hang Seng Index in Hong Kong dipped to a two-month low Monday, Market Watch reported. Investors displayed concern over the HSBC forecast for China’s purchasing managers index in September, set for release at the US market close Monday.
A contraction for the index would likely point to further decline in Asian market. Despite the pressure, China’s Finance Minister Lou Jiwei will not alter his policy over any single economic factor.
“We’re not going to see this wall of money thrown at the Chinese slowdown,” Stuart Beavis, head of institutional equity derivatives at Vantage Capital Markets in Hong Kong, explained to Bloomberg News.
Alibaba pares back on initial surge
Alibaba Group’s shares dipped by 3% this morning, according to the Wall Street Journal. The Chinese e-commerce giant jumped 38% in its initial day of trading on Friday. Despite today’s losses, the company’s outlook is strong. Its IPO increased to $25 billion – the largest ever – following bankers’ decision to expand the deal by 15%.
“Expectations for this company are sky high,” Li Muzhi, analyst at Arete Research Service LLP, told Bloomberg. “The market seems to be using Alibaba as a proxy for the macro-economy and consumer economy.”
Even before the recent increase, Alibaba already owned the highest ever US market IPO. Approximately half the company’s shares are owned by 25 funds.
Owner Jack Ma, 50-year-old former school teacher, has become China’s richest man and second-richest in all of Asia.
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