Morning bid: China gloom overshadows Wall Street-led rebound

Published : 1 month ago, on 10/09/2024

A look at the day ahead in European and global markets from Rae Wee

The rebound in global share markets proved short-lived in Asia on Tuesday, as yet another set of lacklustre economic indicators from China soured the mood and capped gains in Asian stocks.

That has set up a mixed opening in Europe, with EUROSTOXX 50 futures pointing to a positive start, while FTSE futures fell 0.3%.

Figures on British pay growth and joblessness are due later in the day just as London wakes up, where expectations are for them to point to a further easing of inflationary pressures.

That could pave the way for more rate cuts from the Bank of England, though doing so next week could surprise investors, given they are only pricing in a slim chance of 25 basis points worth of easing.

The Fed also meets next week and a 25bp cut is pretty much a done deal, so that leaves the fate of an outsized 50bp move in the hands of Wednesday’s U.S. inflation report.

Turning the focus back to China, trade data on Tuesday showed exports unexpectedly picked up pace in August, but imports missed forecasts.

That followed Monday’s figures on consumer prices, whose rise had little to do with a recovery in domestic demand as producer price deflation worsened.

Chinese stocks struggled to catch a bid on Tuesday and fell to a seven-month trough. Meanwhile, underscoring the anaemic consumer demand, the CSI Tourism Index sank to a record low.

It has been a downward trend for Chinese equities for months now, and it’s obvious Beijing has to do a lot more to restore investor confidence in its ailing stock market.

Mounting trade tensions definitely are not helping as well.

The U.S. House of Representatives passed a bill this week that aims to restrict business with China’s WuXi AppTec BGI and several other biotech companies on national security grounds, sending Hong Kong-listed shares of WuXi AppTec down more than 10% at one point.

Key developments that could influence markets on Tuesday:

– UK ILO unemployment rate (July)

– UK average weekly earnings 3M (July)

– Germany final CPI (August)

 

(Editing by Muralikumar Anantharaman)