Stock Market Open: US Stocks Lower On Chinese Factory Deflation, Brexit

Weaker economic data from China and the latest round of Brexit maneuvering in Britain weighed on markets early Tuesday.

Stocks opened lower. At midday, the Dow Jones Industrial Average was off 14.85 points or 0.06% at the bell. The S&P 500 lost 12.22 points or 0.41% while the Nasdaq Composite dipped 40.43 points or 0.5%.

Some investors have begun shifting money from stocks to corporate bonds, highlighting concerns about market volatility and concerns about the economy. The shift indicates that despite slower growth, investors are unconcerned about the ability of companies to repay their debt. With rates on government bonds expected to fall yet again, corporate bonds are looking more attractive.

The European Central Bank is expected to cut 10 basis points when it meets Thursday despite mounting opposition to the plan. The U.S. Federal Reserve is expected to cut 25 basis points when the Federal Open Markets Committee meets next week.

“It really is the worldview of growth being sluggish but not necessarily negative,” Brian Jacobsen, a senior investment strategist at Wells Fargo Asset Management, told the Wall Street Journal. “Even with the trade drama, even with Brexit, those geopolitical issues aren’t going to compromise corporate credit.”

China eliminated limits for overseas investment in its stocks and bonds in the latest move to attract foreign capital. The action is more of a signal than a response to demand since about two-thirds of the current $300 billion allowance remains untapped.

Deepening factory deflation also is pressuring the Chinese economy while consumer prices are climbing and a faster rate than expected.

In London, Prime Minister Boris Johnson succeeded in suspending Parliament but lost yet another bid for new elections. Parliament will remain out of session until Oct. 14, just three days before Johnson is expected to meet with European Union negotiators about a new deal for Britain’s exit from the economic alliance as scheduled Oct. 31. Any deal now hinges on insistence for no hard border between Northern Ireland and the Irish Republic.

In Asia, Japan’s Nikkei 225 closed up 0.35% while China’s Shanghai Composite was off 0.12% and Hong Kong’s Heng Seng was flat, up just 0.01%. Australia’s S&P/ASX was off 0.51%.

In intraday trading in Europe, the London FTSE was off 0.09% while the German Dax added 0.36% and the French CAC dipped 0.03%.

Crude Oil futures were up 0.48% while gold futures were off 0.34% and silver futures were up 0.26%.