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Asian stocks are struggling for serious China data

Traders are seen in front of a screen with trading numbers in red in the Thailand Stock Exchange building in Bangkok, Thailand on March 13, 2020. REUTERS / Juarawee Kittisilpa / Files

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  • Asian stock markets:
  • China’s retail sales fall 11.1%, production falls 2.9%
  • Nikkei parries wins, S&P 500 futures get lower
  • The dollar holds almost 20-year highs, the yen gets security bids

SYDNEY, May 16 (Reuters) – Asian stock markets struggled to sustain even a minor upswing on Monday after shockingly weak data from China underscored the deep damage cuts made to the world’s second largest economy.

China’s retail sales in April fell 11.1% year-on-year, almost double the decline in the forecast, while industrial production fell 2.9% as analysts had seen a slight increase. read more

The risk had been on the downside since new bank lending in China reached its lowest point in almost four and a half years in April.

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China’s central bank also disappointed those hoping for interest rate cuts, although Beijing on Sunday allowed a further cut in mortgage rates for some homebuyers. read more

The news that Shanghai eased some of the lock-in restrictions only gave investors cold comfort.

Chinese blue chips (.CSI300) fell 0.4% in response, while commodity currencies took a hit led by the Australian dollar, which is often used as a floating proxy for the yuan.

MSCI’s broadest index of Asia-Pacific equities outside Japan (.MIAPJ0000PUS) remained up 0.2%, although it followed a fall of 2.7% last week when it reached a two-year low.

The Japanese Nikkei (.N225) clung to a 0.6% rise, after losing 2.1% last week, although a weak yen provided some support to exporters.

EUROSTOXX 50 futures and FTSE futures went flat. S&P 500 stock futures lost early gains to ease 0.4%, while Nasdaq futures fell 0.3%.

Both are far from last year’s peaks, with S&P falling for six weeks in a row.

Sky-high inflation and rising interest rates led to US consumer confidence falling to a low of 11 years in early May, and increased efforts for retail sales in April on Tuesday. read more


A hyper-hawkish Federal Reserve has driven a sharp tightening of financial conditions, which led Goldman Sachs to cut its 2022 GDP growth forecast to 2.4%, from 2.6%. The growth in 2023 is now seen at 1.6% on an annual basis down from 2.2%.

“Our financial index has tightened by over 100 basis points, which should create a pull on GDP growth of around 1 percentage point,” said Goldman Sachs economist Jan Hatzius.

“We expect the recent tightening in financial conditions to continue, in part because we believe the Fed will deliver on what is priced.”

Futures involve increases of 50 basis points in both June and July and rates between 2.5-3.0% at year-end, from the current 0.75-1.0%.

Fears that all this tightening will lead to a recession spurred to a rally in bonds last week, which caused 10-year interest rates to fall 21 basis points from peaks of 3.20%. Early Monday, interest rates fell again, reaching 2.91%.

The withdrawal meant that the dollar came from a peak of two decades, but not much. The dollar index was last at 104,560, and within spitting distance from the top at 105,010.

The euro stood at $ 1.0394, after falling as low as $ 1.0348 last week. The dollar lost ground on the yen, which appeared to be bidding in safe haven in the wake of the China data, and fell to 128.88 yen.

In cryptocurrencies, Bitcoin was last up 2% to $ 30,354, after reaching its lowest level since December 2020 last week following the collapse of TerraUSD, a so-called stable coin.

In commodity markets, gold was pushed by high interest rates and a strong dollar and was last at $ 1,811 per ounce after falling 3.8% last week.

The price of oil reversed the course when the terrible Chinese data raised concerns about demand again.

Brent lost $ 1.22 to $ 110.33, while U.S. crude oil lost $ 1.04 cents to $ 109.45.

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Reporting by Wayne Cole; Edited by Sam Holmes

Our standards: Thomson Reuters Trust Principles.

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