- Euro STOXX 600 down 0.2%
- China reports weak fourth quarter data
- Asia shares fall 0.4%
- Yen near 7-month highs
LONDON/HONG KONG, Jan 17 (Reuters) – European stocks halted a new-year rally and Asian shares fell after China reported weak fourth-quarter economic data on Tuesday, keeping investors on the sidelines the prospects of a global recession.
The euro STOXX 600 (.STOXX) lost 0.2%, off Monday’s nine-month high. Global stocks have enjoyed a rally so far in 2022, boosted by hopes of a pick-up in China’s economy and easing price pressures in the United States and Europe.
But Chinese data showed the world’s second-largest economy grew 2.9% in the fourth quarter of last year, beating expectations but underscoring the toll exacted by Beijing’s strict “zero-Covid” policy .
China’s 2022 growth of 3% was well below the official target of 5.5%. Excluding a 2.2% expansion after the first hit of COVID-19 in 2020, it was the worst showing in nearly half a century.
Asia Pacific shares outside Japan ( .MIAPJ0000PUS ) extended losses in response and were last down 0.4%. Hong Kong shares (.HSI) fell 0.8% and China’s benchmark CSI300 (.CSI300) pared losses to close flat.
In Europe, China-exposed financial firms HSBC ( HSBA.L ) and Prudential ( PRU.L ) fell 1 percent and 0.4 percent, respectively. Economy-sensitive staples such as Unilever and Danone ( DANO.PA ) also fell more than 1 percent each.
Market players said investors were taking stock of how economies would expand as inflation peaks and central bank monetary policy tightening slows, with data from China underscoring doubts about whether it could act as a stimulus.
“What will reinvigorate growth?” said Gaël Combes, head of fundamental research at Unigestion. “China is probably unlikely to provide the lift that it has provided in the past, such as during the global financial crisis.”
Wall Street will open slightly lower after a holiday Monday, with E-mini futures for the S&P 500 down 0.3%.
CRAZY UNDER PRESSURE
The dollar index rebounded from a seven-month low of 101.77 made a day ago to hold at 102.30, while the Japanese yen held near seven-month highs as investors held on to the breathing space for a possible policy change at the Bank of Japan (BOJ). .
The yen held around 128.51 on Tuesday after hitting a high of 127.22 per dollar on Monday, with traders braced for sharp moves when the Bank of Japan (BOJ) concludes a two-day meeting on Wednesday .
The BOJ is under pressure to change its interest rate policy as soon as Wednesday after its attempt to buy itself backfired, prompting bond investors to test their resolve.
Euro zone bond yields edged up from one-month lows hit late last week, but global bond trading was cautious ahead of the outcome of the BOJ meeting.
Around the world, the R word continues to loom large.
Two-thirds of chief economists in the public and private sectors surveyed by the World Economic Forum in Davos expected a global recession this year, with 18% seeing it as “extremely likely”, more than double the previous survey conducted in September 2022. .
As stocks rallied this year, other riskier assets also gained. The No. 1 cryptocurrency, bitcoin, has posted a gain of about a quarter in January, topping 20% in the past week alone, on track for its best month since October 2021. It was last flat to $21,208.
Spot gold was down 0.5% at $1,909.23 an ounce.
Reporting by Tom Wilson in London and Kane Wu in Hong Kong; Editing by Gerry Doyle, Neil Fullick and Alex Richardson
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