NEW YORK – Global stocks were mixed yesterday, with Wall Street shrugging off early weakness after European and Asian markets retreated in the wake of disappointing Chinese economic data.
Major US indices opened the session solidly lower, weighed down not only by lacklustre Chinese retail sales and industrial data, but also rising expectations that the Federal Reserve will soon announce the phasing out of stimulus measures.
But equities rebounded from the early losses, as bargain hunters stepped up purchases as the session progressed.
Both the Dow and S&P 500 finished narrowly positive to extend their streak of record high closes for a fifth straight day. The Nasdaq ended with modest losses.
After a rocky start, “the rest of the session saw a steady, and mechanical, advance in the large-cap indices as investors bought the dip on no specific news,” said Briefing.com.
The turnaround on Wall Street followed negative sessions in Frankfurt, Paris and London and several Asian equity markets.
“Weaker economic data emanating from China has spoiled the mood, with lower readings on retail sales and industrial production raising questions on whether the recovery momentum can be maintained,” said Richard Hunter, head of markets at Interactive Investor.
In addition, there remain some health issues in Asia generally, while geopolitical concerns have also surfaced following the developments in Afghanistan and the implications for the future of the region.”
Retail sales in China expanded 8.5% in July year-on-year and industrial output was up 6.4%, according to government data, both coming in below analyst estimates.
Lockdowns and other movement restrictions enacted to combat the country’s recent coronavirus outbreaks have been blamed for hampering economic performance, along with a series of deadly floods.
“The spread of domestic outbreaks and natural disasters have affected the economy of some regions, and economic recovery remains unstable and uneven,” National Statistics Bureau spokesman Fu Linghui told a press briefing.
Still, “the national economy continues to stabilise and recover” overall, he added.
But Raymond Yeung, chief economist for greater China at ANZ Banking Group, said the figures “suggest the economy is losing steam very fast.”
Surging infections linked to the Delta variant of the coronavirus “also adds extra risk to August’s activities,” he added.
Oil prices were down around 1.5% on the weak Chinese economic data.
“Expectations were already low leading into the numbers, and combined with the warning from the (International Energy Agency) that demand for crude oil was slowing, prices have slipped sharply,” said market analyst Michael Hewson at CMC Markets UK. – AFP, August 17, 2021
