- Asian stock markets: https://tmsnrt.rs/2zpUAr4
- China data misses all forecasts, retail sales weak
- Dollar suffers a loss of confidence, yields continue to fall
- Geopolitics in focus during the Taliban’s conquest of Afghanistan
- Oil slide due to concerns that Delta hits global travel
SYDNEY, Aug 16 (Reuters) – Asian stocks slipped Monday after a string of Chinese data showed a surprisingly sharp slowdown in the global growth engine, as did many in the world to help curb the spread of the delta variant of COVID-19 Vaccinations.
July retail sales, industrial production and urban investment figures all fell short of forecast, a trend that is likely to get worse given the recent tightening of coronavirus restrictions there. L1N2PN03I
“Asia’s low vaccination rates and low tolerance for spread in the community suggest it is the most economically vulnerable region from the Delta variant,” said JPMorgan economist Bruce Kasman.
“China is in the midst of political support disengagement, which is likely to slow domestic demand growth and weigh on regional performance for the remainder of this year,” he added. “As these issues have built up over the past few weeks, we’ve lowered the regional growth forecasts for 2H21.”
Added to this was the uncertainty about the possible geopolitical effects of the sudden collapse of the Afghan government and its significance for political stability in the region. Continue reading
MSCI’s broadest index for Asia Pacific stocks outside of Japan (.MIAPJ0000PUS) lost 0.5% and moved back towards last month’s lows.
Chinese blue chips (.CSI300) held gains of 0.2%, perhaps in anticipation of more aggressive monetary easing from Beijing.
“The data is likely to fuel speculation about further reserve cuts in the coming weeks and be positive for bonds,” analysts at TD Securities wrote in a press release.
“The central bank is also unlikely to welcome CNY appreciation on a trade-weighted basis while capping CNY appreciation against USD.”
Japan’s Nikkei (.N225) lost 1.7% despite economic growth beating projections for the June quarter. Continue reading
Nasdaq Futures and S&P 500 Futures each lost 0.2%. EUROSTOXX 50 futures fell 0.5% and FTSE futures 0.6%.
Wall Street set new records last week, despite a poll showing a shock in US consumer sentiment to its lowest level since 2011 amid Delta fears. Continue reading
The grim report and China’s slowdown combined resulted in 10-year government bond yields dropping to 1.25%, an 11 basis point drop in just two sessions.
That also undid a week of gains for the dollar, dragging it down from a nearly five-month high of 93.195 to 92.517 against a basket of currencies.
The euro climbed to $ 1.1791 and moved away from key chart support at $ 1.1740 as the dollar fell to 109.39 yen, beating last week’s high of 110.79.
Kim Mundy, a senior currency strategist at CBA, argued that the dollar could rebound this week if minutes of the Federal Reserve’s last monetary policy meeting confirm a restrictive shift in tapering.
The minutes will be released on Wednesday while Fed Chairman Jerome Powell speaks on Tuesday.
“We expect the FOMC to announce that it will reduce its monthly asset purchases in September when payrolls are strong in August,” Mundy said.
“We don’t expect a reduction in the announcement to be broadly expected next month, so if the minutes show that the FOMC is discussing the possibility of an announcement of a reduction as early as September, we expect the dollar to rise.”
In Asia, the Malaysian ringgit fell to an annual low following reports of the country’s prime minister resigning.
In the commodities markets, gold extended its rebound to $ 1,778 after the stop loss suddenly plummeted to $ 1,684 early last week.
Oil prices fell in part on fears that coronavirus travel restrictions could affect demand, particularly in China.
Brent fell 78 cents to $ 69.81 a barrel, while U.S. crude fell 80 cents to $ 67.64.
Adaptation by Lincoln Feast & Shri Navratnam.
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