Markets struggled on Monday to build on last week’s rally, with new data showing China‘s economy grew less than expected in the second quarter as its post-Covid recovery runs out of steam. Equities surged last week as news that US inflation slowed more than forecast fanned hopes that the Federal Reserve would soon end its campaign of interest rate hikes.
The advance was also bolstered by pledges from Beijing to introduce stimulus measures for the struggling economy. However, the scale of the work facing Chinese officials was laid bare Monday, with data showing gross domestic product expanded 6.3 percent on-year in April-June, much less than forecast in an AFP survey.
Growth was also sharply down on a quarter-on-quarter basis, which is seen as a better guide to the state of the economy owing to the low base of comparison with last year’s Covid-depressed performance. Shanghai fell nearly one percent, and there were also losses in Sydney, Seoul, Singapore, Manila and Wellington. Taipei, Mumbai and Jakarta edged up.
Hong Kong was closed because of a typhoon, while Tokyo was shut for a holiday. London, Paris and Frankfurt dropped at the open. The tepid performance Monday came as investors weighed the outlook for US interest rates after last week’s consumer and wholesale price indexes came in below forecasts.
The readings were seen as giving the Federal Reserve room to wind down its monetary tightening drive, which has lasted more than a year.
While it is expected to hike again this month, there is debate over whether it will then call it a day or announce one more before the end of the year. Finance ministers and central bank bosses from the Group of 20 began a two-day meeting in India on Monday, where they will discuss ways to bolster the stuttering global economy.
Source: News365
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