Stocks fall as China data fuels fears of economic slowdown

Stocks fall as China data fuels fears of economic slowdown

  • The euro STOXX 600 falls 0.2%
  • China reports weak fourth quarter data
  • Asia shares fall 0.4%
  • Yen near 7-month highs

LONDON/HONG KONG, Jan 17 (Reuters) – European stocks halted their New Year rally and Asian stocks fell after China reported weak fourth-quarter economic data on Tuesday, keeping investors on edge of the outlook. of a global recession.

The Euro STOXX 600 (.STOXX) lost 0.2%, falling from its nine-month high reached on Monday. Global stocks have enjoyed a rebound so far in 2022, buoyed by hopes of a rebound in China’s economy and an easing of price pressures in the United States and Europe.

But Chinese data showed the world’s second-largest economy grew 2.9% in the fourth quarter of last year, beating expectations but underscoring the cost exacted by Beijing’s strict “zero-COVID” policy.

China’s 2022 growth of 3% was well below the official target of around 5.5%. Excluding a 2.2% expansion after the first hit of COVID-19 in 2020, it was the worst result in nearly half a century.

Asia Pacific stocks outside of Japan (.MIAPJ0000PUS) extended losses in response and fell 0.4%. Hong Kong stocks (.HSI) fell 0.8% and China’s benchmark CSI300 index (.CSI300) recouped losses to close unchanged.

In Europe, China-exposed financials HSBC (HSBA.L) and Prudential (PRU.L) fell 1% and 0.4% respectively. Economically sensitive consumer staples such as Unilever and Danone (DANO.PA) also fell more than 1% each.

Market players said investors were assessing how economies would expand as inflation peaks and central bank tightening slows, and data from China underscores doubts about whether it could act as a stimulus.

“What will revitalize growth?” said Gaël Combes, head of fundamental research at Unigestion. “China is unlikely to provide the momentum it has provided in the past, such as during the global financial crisis.”

Wall Street was expected to open slightly lower after a public holiday on Monday, with E-mini futures for the S&P 500 down 0.3%.

BOXWOOD UNDER PRESSURE

The dollar index rebounded from a seven-month low of 101.77 hit a day ago, holding at 102.30, while the Japanese yen held near seven-month highs as investors held their breath for a possible turnaround. policy at the Bank of Japan (BOJ) .

The yen steadied around 128.51 on Tuesday after hitting a high of 127.22 to the dollar on Monday, and traders are bracing for sharp moves when the Bank of Japan (BOJ) wraps up a two-day meeting on Wednesday.

The BOJ is under pressure to change its interest rate policy as soon as Wednesday after its bid for a breather failed, prompting bond investors to test their resolve.

Euro zone bond yields rose from monthly lows hit late last week, but global bond trading was cautious ahead of the BOJ meeting outcome.

Around the world, the R word continues to hold sway.

Two-thirds of leading public and private sector economists surveyed by the World Economic Forum in Davos expected a global recession this year, and around 18% considered it “extremely likely”, more than double the number in the previous survey conducted in September 2022 .

As stocks have rallied this year, other riskier assets have also gained. The number 1 cryptocurrency, bitcoin, posted a gain of about a quarter in January, jumping more than 20% in the last week alone, heading for its best month since October 2021. It last traded flat at $21,208 .

Spot gold was down 0.5% at $1,909.23 an ounce.

Reporting by Tom Wilson in London and Kane Wu in Hong Kong; Edited by Gerry Doyle, Neil Fullick and Alex Richardson

Our standards: Thomson Reuters Trust Principles.

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