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Stocks fall as Chinese data stoke fears of economic slowdown

  • Euro STOXX 600 down 0.2%
  • China releases weak data for the fourth quarter
  • Asian stocks slip 0.4%
  • Yen close to 7-month highs

LONDON/HONG KONG, Jan 17 (Reuters) – European stocks halted their New Year’s rally and Asian stocks fell after China released lackluster fourth-quarter economic data on Tuesday, keeping investors jittery over the outlook. a global recession.

The Euro STOXX 600 (.STOXX) lost 0.2%, slipping from its nine-month high reached on Monday. Global equities have rallied so far in 2022, boosted by hopes of a rebounding Chinese 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 imposed by Beijing’s strict “zero-COVID” policy.

China’s 2022 growth of 3% was well below the official target of around 5.5%. Excluding a 2.2% expansion after the first hit of COVID-19 in 2020, this was the worst performance in nearly half a century.

Asia-Pacific ex-Japan equities (.MIAPJ0000PUS) losses widened in response and were last down 0.4%. Stocks in Hong Kong (.HSI) fell 0.8% and China’s benchmark CSI300 (.CSI300) recovered the losses to close flat.

In Europe, financials exposed to China HSBC (HSBA.L) and Prudential (PRU.L) declined by 1% and 0.4% respectively. Economy-sensitive consumer staples like Unilever and Danone (DANO.PA) also fell by more than 1% each.

Market participants said investors were taking stock of how economies would develop as inflation peaked and central bank monetary policy tightening slowed, with Chinese data underscoring doubts over whether it could act as a spur.

“What will be the thing that invigorates growth? says Gaël Combes, head of fundamental research at Unigestion. “China is unlikely to provide the lift it has provided in the past, such as during the global financial crisis.”

Wall Street was expected to open slightly lower after a holiday on Monday, with E-mini futures for the S&P 500 down 0.3%.

BOJ UNDER PRESSURE

The dollar index rebounded from a seven-month low of 101.77 hit a day ago, holding at 102.30, while the Japanese yen remained near seven-month highs as investors held back their breath for a potential policy shift at the Bank of Japan (BOJ).

The yen stabilized around 128.51 on Tuesday after hitting a high of 127.22 to the dollar on Monday, with traders bracing for sharp moves when the Bank of Japan (BOJ) wraps up a two-day meeting on Wednesday.

The BOJ is under pressure to change its interest rate policy as early as Wednesday, after its attempt to buy itself some leeway backfired, encouraging bond investors to test its resolve.

Eurozone bond yields rose slightly from monthly lows hit late last week, but global bond trading was cautious ahead of the BOJ meeting outcome.

Around the world, the R-word continues to hold a prominent place.

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

As equities have rebounded this year, other riskier assets have also advanced. The No. 1 cryptocurrency bitcoin posted a gain of around a quarter in January, jumping more than 20% in the past week alone, setting off for its best month since October 2021. is last traded at $21,208.

Spot gold fell 0.5% to $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

Our standards: The Thomson Reuters Trust Principles.

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