US open: Stocks open lower as weak jobs report and Chinese trade data weigh on sentiment

US stocks dropped at the open on Friday as investors sifted through a disastrous non-farm payrolls report, with weak Chinese trade data also weighing on sentiment.

At 1500 GMT, the Dow Jones Industrial was down 0.83% at 25,262.46, while the S&P 500 had lost 0.90% to 2,724.06 and the Nasdaq moved 1.11% weaker to 7,338.92.

The Dow opened 210 points lower as sentiment took a hit after data released overnight showed that dollar-denominated exports in China tumbled 20.7% in February from a year ago as the trade war with the US took its toll, missing expectations for a 4.8% drop and compared to a 9.1% increase in January.

Dollar-denominated imports were down 5.2% from a year ago, versus expectations for a 1.4% decline and a 1.5% year-on-year fall in January.

James Hughes, chief market analyst at Axi Trader, said: "Wall Street stumbled yesterday in the wake of the ECB’s monetary policy announcement. Rather than reassuring investors, this seems to have reiterated the point about just how bad the global economic slowdown is, something that was further underlined by shock news of a 20% decline in Chinese exports for February.

"In light of the recent sell-off, weak wages growth may be sufficient to convince the market that the fed is ready to call time on quantitative tightening. This should in turn have the ability to bolster the inflation print without resorting to talk of a rate hike and any suggestion that cheap money is coming back into circulation also has the potential to lend some support to stocks."

Investors also mulled over a report that revealed the US and China had yet to set a date for a summit on trade.

Terry Branstad, the US envoy to Beijing, said in a Wall Street Journal interview that a date hadn't been finalised for a meeting between Trump and China's Xi Jinping. He also said that preparations for such a meeting were not underway yet.

On the macro front, US job growth almost stalled last month, but the unemployment rate edged lower and wages grew, according to data released by the Labor Department on Friday.

Non-farm payrolls rose by a paltry 20,000, massively undershooting expectations for a 180,000 increase and down from January's revised 311,000 jump.

It wasn't all bad news, however, as the unemployment rate ticked down to 3.8% from 4.0% the month before, coming in a touch ahead of expectations for a rate of 3.9%.

Michael Pearce, senior US economist at Capital Economics, said the sharp slowdown in payroll employment growth provides further evidence that economic growth has slowed in the first quarter, adding weight to his view that the Federal Reserve will not be raising rates this year.

Pearce said the 20,000 rise was "not quite as bad as it looks" given that it followed an unusually strong 311,000 gain in January. However, it's clear that the labour market is now losing momentum.

Elsewhere, TF Global Markets analysts Naeem Aslam said: "The US job's number was a pure disaster, not many were expecting this number to be this bad. Clearly, the dollar bulls have been cursed by the prayers of the bears.

Trying to find a bright spot in the report, Aslam said: "The only thing which was good in this number was the average hourly number and the labor participation rate was steady.

"This particular element will keep the hopes alive for the dollar bulls and the initial reaction which pushed the dollar index lower may help it to recover."

The Labor Department also revised up the payrolls gains for previous months. The change for December was revised to a 227,000 increase form 222,000, while January's increase was revised up to 311,000 from 304,000. After revisions, job gains have averaged 186,000 a month over the last three months.

Elsewhere, US housing starts surged past expectations in January, according to figures released by the Commerce Department.

Housing starts rose 18.6% to a seasonally-adjusted rate of 1.23 million from December's revised rate of 1.037m. Analysts were expecting a 9.9% increase to 1.21m.

On the year, however, housing starts were down 7.8% from January 2018's revised rate of 1.33m.

Single-family housing starts fell to 812,000 from December's revised 829,000.

Meanwhile, building permits were up 1.4% in January to a seasonally-adjusted rate of 1.345m, but down 1.5% from January 2018's rate of 1.366m. Analysts were expecting a level of 1.287m.

Single-family housing starts fell 4.6% to 824,000 from October's revised 864,000. Privately-owned housing completions nudged came in at 1,244m, up 27.6% from December's revised rate of 975,000, and 2.1% higher compared to January 2018.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "The rebound in starts reverses the December plunge, which likely was due to a combination of weather effects and homebuilders’ nervousness as the stock market tanked; the numbers hugely overstated the softening in the market.

"New home sales are now picking up, and the mortgage applications data point to further gains ahead, so single-family construction should creep higher. The multi-family numbers are wild, but the trends are flat. Housing isn’t booming, but neither is it rolling over, and it isn’t going to drag down the rest of the economy."

In corporate news, Netflix shares fell 1.94% in early trade after analysts at Buckingham downgraded the video-on-demand outfit to 'neutral' from 'buy'.

ExxonMobil shares slid 2.02% after Cowen dropped its 'market perform' and slashed its target price amidst declining crude prices.

Big Lots shares were trading 8.70% higher after beating estimates on profits and same-store sales, while DowDuPont stocks slipped 1.76% after confirming its intention to launch a $3bn share buyback program after the separation of its materials science unit.