February 3, 2023

Raven Tribune

Complete News World

Stocks fall as China data stokes fears of an economic slowdown

  • The Euro Stoxx 600 fell 0.2%.
  • China reports weak data for the fourth quarter
  • Asian stocks fell 0.4%.
  • The yen is close to its highest level in 7 months

LONDON/HONG KONG (Reuters) – European stocks halted their rally in the new year and Asian stocks fell after China reported weak fourth-quarter economic data on Tuesday, keeping investors on edge about the prospects of a global recession.

Euro Stoxx 600 (.STOXX) It lost 0.2 percent from Monday’s nine-month high. Global stocks have enjoyed a rally so far in 2022, driven by hopes of a recovery in the Chinese economy and an easing of price pressures in the United States and Europe.

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

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

Asia Pacific stocks outside Japan (.MIAPJ0000PUS) Losses widened in response, last dropping 0.4%. stocks in Hong Kong (.HSI) Decreased 0.8% and China’s benchmark CSI300 index (.CSI300) He recovered losses to close flat.

In Europe, HSBC financial exposed to China (HSBA.L) warned (PRU.L) It fell 1% and 0.4%, respectively. Economy-sensitive consumer goods such as Unilever and Danone (DANO.PA) It also fell more than 1% each.

Market players said investors are taking stock of how economies will expand as peak inflation slows and central bank tightening slows, with China data confirming doubts about whether it could act as a catalyst.

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“What is something that will reactivate growth?” said Gail Combs, head of basic research at Unigestion. “China is unlikely to provide the support it has provided in the past, as it did during the global financial crisis.”

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

The Bank of Japan is under pressure

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

The yen settled around 128.51 on Tuesday after peaking at 127.22 per dollar on Monday, with traders bracing for sharp moves when the Bank of Japan (BOJ) wraps up its two-day meeting on Wednesday.

The Bank of Japan is under pressure to change interest rate policy as soon as Wednesday, after its attempt to buy breathing room backfired, encouraging bond investors to test its resolve.

Eurozone bond yields are up slightly from the month lows hit late last week, but bond trading globally was cautious ahead of the BoJ meeting outcome.

Around the world, the R-word still looms large.

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

And as stocks rebounded this year, so did other riskier assets. Bitcoin, the number one cryptocurrency, posted gains of about a quarter in January, jumping more than 20% in the past week alone, putting it on track for its best month since October 2021. It was last trading flat at $21,208.

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Spot gold fell 0.5% to $1909.23 an ounce.

Additional reporting by Tom Wilson in London and Ken Wu in Hong Kong; Editing by Gerry Doyle, Neil Vollick, and Alex Richardson

Our standards: Thomson Reuters Trust Principles.