Nervousness at Wall in wake of Chinese data

LAST UPDATE: 16.58

Nervousness prevails on Wall Street stock indices at the start of the week, in the wake of negative economic data released by China. Meanwhile, China’s central bank also unexpectedly cut interest rates, raising concerns about the country’s economic recovery.

In this climate, Mr Dow Jones retreats 0.06% to 33,740.47 units while at the same time o S&P 500 slipping by 0.09% to 4,276.15 points. At the same time, Mr Nasdaq gains 0.14% to 13,065.18 points.

It is noted that China’s economy showed unexpected slowing trends in July, with industrial activity and retail trade under pressure from the zero-Covid policy. Meanwhile, the People’s Bank of China (PBOC) unexpectedly cut the one-year medium-term lending facility (MLF) rate to some financial institutions by 10 basis points (bps) to 2.75% from 2.85%.

“Recession concerns are rising globally. China’s economy shrank in the second quarter. The US entered a ‘technical recession’. Natural gas flows to Western Europe are curtailing. Over the past three months, we have revised our forecast down for global growth to 2.5% in 2022, which is about 40 bp lower than in May,” Morgan Stanley’s Seth Carpenter said.

It is recalled that last week the S&P 500 gained 3.25% and marked the fourth positive week in a row and the longest winning streak since 2021. The Nasdaq closed the week 3.08% higher, also for the fourth consecutive week. The Dow rose 2.9%.

Last week’s gains came after economic data showed that inflationary pressures may be easing a bit. The consumer price index was essentially unchanged from June to July, the producer price index showed a surprise decline and import prices fell more than expected.

Investors await a week of earnings from major retailers including Home Depot, Walmart and Target and are looking for clues about how their businesses were affected by inflation and other macroeconomic challenges in the most recent quarter. Retail sales data is also scheduled to be released this week.