Stock markets diverged Monday as traders weighed official data showing China’s economy grew less than expected in the second quarter with hopes of an end to US interest-rate hikes.
Oil prices also slid on concerns that China’s weakening economy will mean lower demand from the world’s top importer of the fossil fuel
While traders reacted to economic storm clouds, a typhoon forced the closure of the Hong Kong stock market.
Equities last week surged as news that US inflation slowed more than forecast fanned hopes that the Federal Reserve would soon end its campaign of tightening borrowing costs.
“Traders want to see what unfolds with market pricing this week knowing that stocks have been on a tear,” said Briefing.com analyst Patrick O’Hare.
Wall Street stocks edged higher in morning trading.
“Traders looking for a catalysts to drive movement will be spoiled for choice from tomorrow, thanks to more earnings from the banking sector,” said Chris Beauchamp, chief market analyst at online trading platform IG.
European stocks finished lower across the board in afternoon trading following a mostly lower Asian session. Paris fell 1.1 percent as shares in luxury firms took a hit from the news on China, a major market for their sales growth in recent years.
The euro reached $1.1252, the highest level since February 2022 on expectations of an end soon to the Federal Reserve’s tightening, while the yen and sterling have also pushed to multi-month highs in recent sessions.
Last week’s stock market advances were also bolstered by pledges from Beijing to introduce stimulus measures for the struggling Chinese economy.
However, “investors have been greeted by a dismal Chinese data dump to start the week”, said SPI Asset Management’s Stephen Innes.
Data showed China’s recovery after lifting Covid restrictions was faltering as the economy grew by 6.3 percent in the second quarter, much lower than expected by analysts surveyed by AFP.
The National Bureau of Statistics added that youth unemployment hit a record 21.3 percent in June and retail sales also missed estimates, adding to months of data highlighting softness in the world’s number-two economy.
“China’s recovery is going from bad to worse,” said Harry Murphy Cruise at Moody’s Analytics.
“After a sugar injection in the opening months of 2023 (following the lifting of zero-Covid measures), the pandemic hangover is plaguing China’s recovery.”
The readings will further stoke calls for authorities to announce more measures to fire up growth, having cut interest rates last month.
Investors will also keep a close eye on fresh company results, with Bank of America, Tesla, Netflix and EasyJet among those reporting this week.
The quarterly earnings reporting season got off to a strong start last week with JPMorgan Chase and Wells Fargo banks beating expectations.
In the commodities market, wheat and corn futures wobbled after Russia said it was exiting a major agreement allowing Ukraine grain exports.
Wheat futures rose as much as 4.2 percent and corn peaked at 2.5 percent following the announcement but prices fell into the red later in the day.
Over the course of the last year, the Black Sea Grain Initiative has enabled the export in cargo of more than 32 million tonnes of Ukrainian grain, helping avoid shortages on markets and bring prices down after they spiked after the war broke out.
Key figures around 1530 GMT
New York – Dow: UP 0.2 percent at 34,572.19 points
London – FTSE 100: DOWN 0.4 percent at 7,406.42 (close)
Frankfurt – DAX: DOWN 0.2 percent at 16,068.65 (close)
Paris – CAC 40: DOWN 1.1 percent at 7,291.66 (close)
EURO STOXX 50: DOWN 1.0 percent at 4,356.79 (close)
Shanghai – Composite: DOWN 0.9 percent at 3,209.63 (close)
Tokyo – Nikkei 225: Closed for a holiday
Hong Kong – Hang Seng Index: Closed because of storm
Euro/dollar: UP at $1.1237 from $1.1230 on Friday
Dollar/yen: UP at 138.99 yen from 138.82 yen
Pound/dollar: DOWN at $1.3084 from $1.3091
Euro/pound: UP at 85.88 pence from 85.76 pence
West Texas Intermediate: DOWN 1. percent at $74. per barrel
Brent North Sea crude: DOWN 1. percent at $78. per barrel
burs-rl/bp
