Global shares slip as Chinese economy unexpectedly stumbles
LONDON (Aug 16) - Global shares slid on Monday after a raft of Chinese economic indicators showed a surprisingly sharp slowdown in the engine of global growth, just as much of the world races to stem the spread of the Delta variant of COVID-19 with vaccinations.
A 10-day run of gains for European stocks came to a halt, with commodity-linked stocks - which are sensitive to demand from China - falling the most. The pan-European STOXX 600 index was down 0.5% past midday in London, easing from record levels last week.
Figures on July retail sales, industrial production and urban investment in China all missed forecasts, a trend that is only likely to get worse given the recent tightening in coronavirus restrictions there.
"The July data has been adversely affected by the massive flooding in China over that period, plus the movement restrictions internally and at key export ports, to curb the stubborn appearance of the Delta variant, albeit in small numbers," said Jeffrey Halley, senior market analyst at OANDA.
"The latter is weighing on investors' nerves now, especially when one looks at the evolution of outbreaks in the region from Australia to Singapore to Japan and everywhere in between. If anyone can break the trend, it is China."
But widespread outbreaks and restrictions would be a game-changer for the recovery in Asia and potentially beyond, given the likely impact on supply chains, Halley said.
The sudden collapse of the Afghan government and what it may mean for political stability in the region added to uncertainty among investors and boosted defensive assets.
MSCI's All Country World Index, which tracks shares across 49 countries, fell 0.3% on the day. U.S. stock futures also traded down, with E-minis for the S&P 500 and Nasdaq futures 0.3% lower.
Chinese blue-chips trimmed some losses to close 0.1% lower, perhaps in anticipation of a more aggressive policy easing from Beijing.
"The data will likely intensify speculation of further reserve requirement cuts in the weeks ahead and be positive for bonds," wrote analysts at TD Securities in a note.
Reuters
