US markets fell on Friday on soft trade data from China. The S&P 500 fell 18.02 points or 1.40% to 1,270.98. The Dow lost 172.45 points or 1.42% to 11,951.91. Markets were pulled lower by weak US economic growth during the week. For the week, the S&P 500 fell 2.2%, while the Dow dropped 1.6%. It was the 6th consecutive week of losses for the Dow, while the S&P 500 is down 6.6% from its high in May.
On Thursday, it was announced that initial jobless claims last week increased by 1,000 to 427,000. It was worse than the 419,000 that economists expected. Also on Thursday, US April trade deficit fell 6.7% from March to 43.7 billion. It was better than the $48.3 billion that economists expected, and lifted US markets on Thursday.
Oil tumbles on Saudia Arabia
A report that stated Saudi Arabia is planning to increase its oil production to 10 million barrels per day sent WTI prices below $100/barrel. On Friday, WTI dropped 2.6% or $2.64 to close at $99.29.
Soft trade data from China
Trade data from China helped to push markets lower this week. The trade surplus was smaller than expected, while export growth slowed. The trade surplus in May was $13.1 billion, while export growth slowed to 19.4% from 29.9%.
Greece crisis continues
Amid protests, the Greek government continued with plans to sell assets, cut public sector employees and increase taxes. ECB chief Jean-Claude Trichet hinted this week that he will raise the interest rate from its current level of 1.25% on July 7. This caused an outcry among economists concerned that the interest rate hike will add to the problems of the periphery euro zone nations.
Looking ahead to next week
The direction of the markets next week will depend on the many US economic data that will be announced, including retail sales, housing starts and inflation. Markets could bounce back on bargain hunting on individual days. However, the trend will likely continue to be down. With weak US growth, a euro zone debt crisis and a soft landing in China, it will be hard for markets to head higher. Looking ahead to July, the planned interest rate hike by the ECB will hurt peripheral euro zone nations. They are already in trouble as it is, and a higher interest rate will only make borrowing costs more expensive.