Market round up: Stocks retreat as iron ore hurts commodity shares
In other news, mutual funds buy cyclicals in FY17, cut exposure to IT; manufacturing and retail drive China’s Q1 growth
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Global equity markets fell on Tuesday with shares in Australia and London retreating as a sell-off in iron ore pulled down commodity producers. Markets in Sydney, Hong Kong and Europe dropped after the Easter holidays, as investors caught up with global markets that have been weighed down by geopolitical concerns. Iron ore continued to plunge, taking a toll on miners’ shares. Fortescue Metals Group Ltd, Rio Tinto Group and BHP Billiton Ltd slumped more than 1.5% in Sydney on Tuesday. Citigroup Inc. said that it’s bearish on the outlook for the raw material, amid expectations of global oversupply and a slowdown in Chinese steel demand growth.
Mutual funds buy cyclicals in FY17, cut exposure to IT
The domestic mutual fund industry reduced exposure to the information technology (IT) sector and bought more cyclical stocks in 2016-17. The industry’s exposure to global cyclicals—metals, and oil and gas—increased to 9.4% of total assets in March from 7.5% a year ago, according to data compiled by Motilal Oswal Securities Ltd. Among domestic cyclicals, mutual funds are being selective. They pared exposure to cement and capital goods sectors but raised investments in non-banking financial services firms, public sector banks and chemical stocks. Exposure to the IT sector has seen a notable reduction, with ownership down 2.8 percentage points from a year ago.
Manufacturing and retail drive China’s Q1 growth
A recovery in China’s industrial sector, which accounts for about one-third of the economy, drove the country’s better-than-expected first quarter (Q1) economic growth as export orders picked up and steel output hit a record. Data on Tuesday from China’s National Bureau of Statistics showed the industrial sector grew 6.5% in the first quarter from a year earlier, its fastest pace since the fourth quarter of 2014. On Monday, China reported first quarter growth of 6.9%, the quickest in six quarters. Within the industrial sector, manufacturing grew 7% compared with the first quarter of last year. Analysts credited growth in exports, in contrast to a contraction in the first three months of 2016, for providing the pickup in the first quarter.