Stock Markets Drop as Chinese Data Disappoints

Date: 05 July 2023 - 22:12

News ID: ۱۱۶۸۷۰

PARIS (AFP) - Stock markets retreated Wednesday on poorly-received Chinese data, as investors looked ahead to the reopening of Wall Street after the Independence Day holiday.
“There are fresh concerns about the global economy powering down as data from China’s service sector underlines how tepid the post-pandemic recovery has become, just as trade tensions between Beijing and Washington ramp up,” noted Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“This has put indices in Europe on the back foot, following falls in Asia.”
European oil prices declined with China being a key consumer of crude, while US futures were higher compared with Monday’s close.
All eyes later will be on the release of minutes from the U.S. Federal Reserve’s June policy meeting.
They should provide an insight into officials’ thinking when they decided to pause interest rates for the first time after 10 straight hikes to combat elevated inflation.
The minutes will be followed Friday by closely-watched U.S. jobs data, a key guide to the state of the world’s top economy.
While the Fed and other central banks’ battle against sticky inflation has been the overriding issue for investors this year, China’s struggle to get growth back on track has also been a major cause of angst.
A string of indicators in recent months has shown that policymakers have a lot of work to do to get the world’s number two economy, a key driver of global GDP, back up to speed.
The initial burst of activity seen after the lifting of the country’s zero-Covid policy at the end of 2022 has subsided.
Apart from the odd pledge of action and some small interest rate cuts, authorities have done little to address the problem.
In the latest sign of trouble, the Caixin private survey of the services sector showed that activity slowed sharply in June and at a much faster pace than feared.
That came after an official reading also pointed to weakness in the sector and added to a run of soft data on trade and consumer activity, among other things.
However, analysts said that while Beijing has said it plans to provide much-needed support, the scope will be limited owing to huge debt levels in the country, meaning the bazookas deployed in the past cannot be used this time.
China-U.S. relations remain an issue, and President Xi Jinping’s government this week added to their tech standoff by imposing export controls on key metals used in making microchips.
Officials said Monday’s measure placed on shipments of gallium and germanium was to protect national security.