After the publication of disappointing results regarding the state of the Chinese economy, the world’s stock markets also plunged on Monday.
While European stocks were enjoying a 10-day winning streak, the unexpected slowdown in the Chinese economy has halted the advance. The stocks most affected by the Chinese downturn are those linked to commodities, which are highly dependent on demand from China.
The world’s second largest economy is dragging the rest of the world down with it, and at midday in London, the pan-European STOXX 600 index was losing 0.5%. Around 13:20, the Paris Stock Exchange was down 0.80%, London 0.98%, Frankfurt 0.41% and Milan 0.32%.
Data on retail sales, urban investment and industrial production in China for July lagged forecasts and accentuated investors‘ concerns.
“July data was affected by massive flooding in China during the period, coupled with movement restrictions within the country and at major export ports to curb the persistent, albeit small, outbreak of the Delta variant”, said Jeffrey Halley, senior market analyst at OANDA, interviewed by Reuters.
The Taliban offensive in Kabul that led to the collapse of the Afghan government and the worsening security situation in Afghanistan is further adding to Asian and U.S. investors’ fears. This unstable environment is thus boosting defensive assets.
As a result, the MSCI Global Index (which includes stocks from nearly 49 countries) fell by 0.3%. In Asia, Japan’s Nikkei lost 1.7% despite the fact that the country’s economic growth exceeded estimates for the June quarter. Hong Kong and Shanghai were also in the red on Monday.
The fall in Chinese blue chips (.CSI300) was cushioned at 0.1%. Nasdaq futures and E-minis for the S&P 500 were down 0.3%, while U.S. equity contracts were revised downward.
Regarding the bond market, the interest rate of the 10-year US debt maintains a decline of 1.28%. In the face of fears of the Delta variant, a recent survey showed that U.S. consumers‘ morale was at its lowest this month.
In currencies, the dollar rose 0.1% while the euro lost 0.2% to $1.1774. As for commodities, gold is recovering from the sharp drop to $1,684 early last week, back to $1,771. For oil, the numbers are also in the red and Brent crude is down 1.6% to $69.43 a barrel.
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Featured photo : © Reuters
