Global stocks fall after China data; US stocks rise

NEW YORK/LONDON, July 17 (Reuters) – Global shares fell and the dollar eased on Monday after data showed the Chinese economy growing more slowly than expected, but U.S. stocks rose on expectations that corporate earnings will beat forecasts and that the U.S. consumer will continue to use.

China reported growth of 0.8% in the second quarter, above the 0.5% forecast, while the annual rate slowed more than expected to 6.3%, well below expectations for a reading of 7.3%.

Analysts said the data suggest China’s post-COVID boom is over. But fears in the US earlier this year of a hard economic landing have faded as lower consumer inflation has brightened the US outlook as companies report second-quarter results.

“The corporate churn rate is a little bit higher than it has been in the last couple of quarters, but the S&P 500 companies have largely been able to beat really low analyst estimates coming into earnings season,” said Anthony Saglimbene, market strategist at Ameriprise. Financial in Troy, Michigan.

“What the market is going to be looking for over the next few weeks is whether demand holds up and is the corporate outlook still generally positive for the rest of the year?”

Tesla is the first of the big tech names to report this week, along with Bank of America, Morgan Stanley, Goldman Sachs and Netflix.

Shares in Europe were weaker, with the pan-European STOXX 600 index (.STOXX) down 0.60% while MSCI’s US-centric gauge of shares around the world (.MIWD00000PUS) was slightly lower by 0.01%.

On Wall Street, the Dow Jones Industrial Average (.DJI) was up 0.18%, the S&P 500 (.SPX) was up 0.20% and the Nasdaq Composite (.IXIC) was up 0.47%.

The dollar traded around flat against a basket of currencies after last week suffered its biggest weekly decline in 2023 as Treasury yields fell.

The currency is likely to consolidate as investors await the Federal Reserve’s meeting next week, when the US central bank is widely expected to raise interest rates by another 25 basis points.

June retail sales on Tuesday will be the key US economic figures for the week, although the news is unlikely to affect the path of monetary policy or market direction.

U.S. retail sales data is expected to show a 0.3% increase from previous cars, continuing the slower trend but solid enough to fit into the market’s preferred soft-landing theme.

Futures are pricing in a further 32 basis points of tightening this year, with the benchmark rate expected to peak at 5.40% in November. That means the market sees little chance of further rate hikes after the Fed wraps up a two-day meeting on July 26.

The dollar index fell 0.002%, with the euro up 0.02% to $1.1229.

US Treasury yields fell sharply last week as slowing consumer and producer price growth in June raised expectations that price pressures will continue to moderate and lead to more dovish monetary policy.

The two-year Treasury yield, which usually moves in line with interest rate expectations, rose 1.5 basis points to 4.766%, while the benchmark 10-year bond rose 1.4 basis points to 3.834%.

Sterling reversed course, falling 0.2% to $1.3089 ahead of UK inflation figures this week, where another high reading would increase the risk of further significant rate hikes.

“A lift in core CPI could encourage financial markets to price in further tightening from the Bank of England and push GBP/USD towards upside resistance at $1.3328,” analysts at CBA said in a note.

Oil fell more than 1% after weaker-than-expected Chinese economic growth.

US crude fell 0.74% to $74.86 a barrel and Brent was at $79.22, down 0.81%.

Reporting by Herbert Lash, additional reporting by Karen Brettell in New York, Amanda Cooper in London, Wayne Cole in Sydney; Editing by Lincoln Feast, Christina Fincher and Barbara Lewis

Our standards: Thomson Reuters Trust Principles.