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Stock markets subdued after weaker than expected Chinese data

Equity markets were subdued Monday as disappointing Chinese economic data and an interest rate cut by the country’s central bank hampered the global outlook.

Chinese stocks fell lower, with the CSI 300 meters of listed shares of Shanghai and Shenzhen falling 0.1 percent and the Hang Seng index in Hong Kong falling 0.7 percent. In Europe, the regional Stoxx 600 stock index rose 0.2 percent. The German Dax lost 0.1 percent.

US stock futures also fell, with contracts tracking the S&P 500 falling 0.5 percent. The broad Wall Street index closed its fourth straight week of gains on Friday.

These measures came after Chinese economic data showed retail sales in the country rose 2.7 percent year-on-year in July, while industrial production was 3.8 percent higher. Economists had forecast larger increases of 5 percent and 4.6 percent, respectively.

Analysts at Goldman Sachs said the data showed that the growth recovery since the April and May lockdowns, spurred by the Omicron Covid variant, “came to a halt and even declined slightly in July”.

“This points to still weak domestic demand amid sporadic Covid outbreaks, production cuts in some energy-hungry industries and the negative impact of recent risk events in the real estate sector,” she added.

In an effort to boost growth, China’s central bank cut the interest rate on medium-term loans, which it provides one-year loans to the banking system, by 0.1 percentage point to 2.75 percent on Monday.

The Chinese 10-year yield fell by 0.07 percentage point to 2.67 percent, while the price of the government debt instrument rose.

Elsewhere in the bond markets, the yield on the 10-year US Treasury remained stable at 2.86 percent. Data from last week indicated that inflation could stabilize in the world’s largest economy — a trend that is being watched closely by investors as they try to assess how far the US Federal Reserve will raise interest rates to offset rapid price growth. curb.

Market participants will examine the minutes of the Federal Open Market Committee’s latest monetary policy meeting on Wednesday for clues about the central bank’s tightening plans, after Fed officials suggested last week that encouraging data did not mean inflation had been tamed.

The EU, Japan and Canada will also release inflation data this week, while results from companies like Walmart and Target will provide further clues about the health of US consumers. Weak consumer clock gains in May led to some of the biggest declines for US stocks this year.

In foreign exchange markets, the dollar gained 0.3 percent against a basket of six leading currencies.

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