Stocks, oil slip as dire China data feed recession fears

On March 13, 2020, at the Thai Stock Exchange building in Bangkok, Thailand, traders will be displayed in front of the screen displayed in red. REUTERS / Juarawee Kittisilpa / Files

Sydney, May 16 (Reuters)-Asian stock markets stumbled on Monday, highlighting that surprisingly weak data from China is causing serious damage to the world’s second-largest economy, oil prices It has fallen.

China’s April retail sales plummeted 11.1% year-on-year, almost double expectations for the fall, but industrial output fell 2.9% as analysts sought a slight increase. read more

Mitul Kotecha, Head of Emerging Markets Strategy at TD Securities, said: ..

“China’s weak growth trajectory will put pressure on the market, further worsen the outlook for the global economy and put pressure on risk assets. We anticipate a further decline in CNY.”

In Europe, both EUROSTOXX 50 and FTSE futures have relaxed by 0.3%. S & P 500 futures lost an early rise due to a 0.6% decline, while Nasdaq futures fell 0.5%. Both are far from last year’s highs, with S & P declining for the sixth straight week.

China’s central bank also disappointed those who wanted to ease interest rates, but on Sunday Beijing allowed some homebuyers to further reduce their mortgage rates. read more

Monday’s data obscured the news that Shanghai has reopened widely and is aiming to be able to resume normal life from June 1st. read more

Chinese blue chips (.CSI300) Commodity currencies were hit by the Australian dollar, which is often used as a liquid substitute for the yuan, but fell 0.8% in reaction.

MSCI’s Widest Non-Japanese Asia Pacific Equity Index (.MIAPJ0000PUS) Following the 2.7% slide, which hit a two-year low last week, it lost its early rise and leveled off.

Nikkei in Japan (.N225) Despite the depreciation of the yen providing some support to exporters, it stuck to a profit of 0.5%, which lost 2.1% last week.

Very high inflation and rising interest rates dropped US consumer confidence to its lowest level in 11 years in early May, raising stakes in April’s retail sales scheduled for Tuesday. read more

Downgrade growth

Goldman Sachs has lowered its 2022 GDP growth forecast from 2.6% to 2.4% as the hyperhawkish Federal Reserve has caused a sharp tightening of its fiscal position. Growth in 2023 is currently declining from 2.2% to 1.6% on an annual basis.

“Our financial position index has been tightened by more than 100 basis points and GDP growth should be down about 1pp,” said Jan Hatzius, an economist at Goldman Sachs.

“We expect the recent tightening of fiscal conditions to continue, partly because we believe the Fed will achieve pricing.”

Futures mean a 50 basis point increase in both June and July, rising at a rate of 2.5-3.0% by the end of the year from the current 0.75-1.0%.

Concerns that tightening could lead to a recession spurred bond recovery last week, with 10-year yields down 21 basis points from a peak of 3.20%. At the beginning of Monday, yields were easing again until they reached 2.91%.

With the pullback, the dollar fell below the top of the 20-year, but not so much. The dollar index was the last at 104.560 and was within the spit distance of the 105.010 peak.

The euro was $ 1.0403, down to $ 1.0348 last week. The dollar fell against the yen, which appeared to have been bid safely in response to Chinese data, to 129.02 yen.

In cryptocurrencies, Bitcoin rose 2% to $ 30,354, the lowest since December 2020 last week after the collapse of the so-called stablecoin TerraUSD.

In the commodity market, gold was squeezed by high yields and a stronger dollar, dropping 3.8% last week and continuing to trade at $ 1,809 per ounce.

Oil prices have reversed the course as disastrous Chinese data rekindled concerns about demand.

Brent lost $ 2.31 to $ 109.24 and US crude oil lost $ 2.14 to $ 108.35.

Report by Wayne Cole; edited by Sam Holmes and Clarence Fernandez

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