Stocks slip as China data sparks recession fears

  • The euro STOXX 600 was down 0.2%
  • China reports weak Q4 data
  • Asian shares fell 0.4%
  • Yen nears 7-month high

LONDON/HONG KONG, Jan 17 (Reuters) – European shares paused their New Year’s rally and Asian shares slipped as China reported weak fourth-quarter economic data on Tuesday, putting investors on edge over the prospect of a global recession.

Euro STOXX 600 (.STOXX) It lost 0.2%, slipping from its nine-month high on Monday. Global stocks have enjoyed a rally so far in 2022, fueled by a rebound in China’s economy and hopes that price pressures in the US and Europe will ease.

But Chinese data showed the world’s second-largest economy grew 2.9% in the fourth quarter of last year, beating expectations but underscoring a figure dictated by Beijing’s strict “zero-Covid” policy.

China’s growth of 3% in 2022 was well below the official target of 5.5%. Barring a 2.2% expansion in 2020 after the first impact of Covid-19, this is the worst showing in almost half a century.

Asia Pacific shares outside Japan (.MIAPJ0000PUS) It widened losses in response and was last down 0.4%. Stocks in Hong Kong (.HSI) China’s benchmark CSI300 index fell 0.8% (.CSI300) Flat clawed back losses.

In Europe, China-exposed funds are HSBC (HSBA.L) and Prudential (PRU.L) fell 1% and 0.4% respectively. Economically-sensitive consumer staples such as Unilever and Danone (DANO.PA) Each fell more than 1%.

Market players said investors were taking note of how the economy would expand as inflation peaked and the central bank eased monetary policy, underscoring skepticism that data from China would act as a stimulus.

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“What revitalizes growth?” said Gail Combs, head of basic research at Unigestion. “China is unlikely to provide the lifts it provided in the past during the global financial crisis.”

Wall Street opened slightly lower after the public holiday Monday, with e-mini futures for the S&P 500 down 0.3%.

Boge under pressure

The dollar index traded at 102.30 from a seven-month low of 101.77 a day earlier, while the Japanese yen hovered near a seven-month high as investors braced for a possible policy change at the Bank of Japan (BOJ). .

The yen settled around 128.51 on Tuesday after hitting a high of 127.22 per dollar on Monday, as traders braced for sharper moves as the Bank of Japan (BOJ) wraps up its two-day meeting on Wednesday.

The BOJ, which is under pressure to change its interest rate policy as soon as Wednesday, backed off its bid to take a breather, emboldening bond investors to test its resolve.

Eurozone bond yields rose from a month-low at the end of last week, but bonds traded cautiously globally ahead of the end of the BOJ meeting.

Around the world, the R-word continues to loom large.

Two-thirds of private and public sector chief economists surveyed by the World Economic Forum in Davos expect a global recession this year, with some 18% seeing it as “very likely” – more than double the previous survey conducted in September 2022. .

As stocks rallied this year, other riskier assets also gained. No.1 cryptocurrency Bitcoin has made nearly a quarter of gains in January, rising more than 20% in the past week alone, and is on course for its best month since October 2021. It last traded at $21,208.

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Spot gold was down 0.5% at $1909.23 an ounce.

Reporting by Tom Wilson in London and Ken Wu in Hong Kong; Editing by Gerry Doyle, Neil Fullick and Alex Richardson

Our Standards: Thomson Reuters Trust Principles.

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