Stocks tumbled as data from China fueled global economic fears

  • The euro STOXX 600 was down 0.2%
  • China’s 2022 growth is one of the worst in nearly 50 years
  • Asian shares fell 0.4%
  • Yen nears 7-month high

LONDON, Jan 17 (Reuters) – Stocks slipped on Tuesday after China’s growth slowed in 2022, halting their New Year’s rally and putting investors on edge over the risk of a global recession, while the Japanese yen hung ahead of a seven-month high. A major central bank decision.

Euro STOXX 600 (.STOXX) It lost 0.2%, slipping from its nine-month high on Monday. Global stocks have advanced so far in 2022, fueled by a rebound in China’s economy and hopes that price pressures in the US and Europe will ease.

But Chinese data showed the world’s second-largest economy grew 2.9% in the fourth quarter of last year, beating expectations but underscoring a figure dictated by Beijing’s strict “zero-Covid” policy.

China’s growth of 3% in 2022 was well below the official target of 5.5%. Barring a 2.2% expansion in 2020 after the first impact of Covid-19, this is the worst showing in nearly half a century.

Rate sensitive technical stocks (.SX8P) The weighted STOXX 600 as a whole fell 0.8%. Wall Street, meanwhile, opened slightly lower after Monday’s public holiday, with E-mini futures for the S&P 500 down 0.3%.

Market players said investors were taking note of how the economy would expand as inflation peaked and the central bank eased monetary policy, underscoring skepticism that data from China would act as a stimulus.

“What revitalizes growth?” said Gail Combs, head of basic research at Unigestion. “China is unlikely to provide the lift it has provided in the past during the global financial crisis.”

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Previously, Asia Pacific stocks outside of Japan (.MIAPJ0000PUS) Losses widened in response to Chinese data, falling 0.4%. Stocks in Hong Kong (.his) China’s benchmark CSI300 index fell 0.8% (.CSI300) Flat clawed back losses.

Boge under pressure

Around the world, the R-word continues to loom large.

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

Currency traders focused on central banks.

The Japanese yen was near a seven-month high as investors braced for a possible policy change at the Bank of Japan (BOJ).

The yen settled around 128.78 after hitting a high of 127.22 per dollar on Monday, as traders braced for sharper moves when the BOJ wraps up a two-day meeting on Wednesday.

The BOJ, which is under pressure to change its interest rate policy as soon as Wednesday, backed off its bid to take a breather, emboldening bond investors to test its resolve.

The dollar index rose to 102.27 from a seven-month low of 101.77 made a day earlier, while sterling rose after the pace of wage growth in Britain saw the Bank of England closely watch how much it would raise interest rates. Rates, again, accelerated.

The pound rose 0.5% to $1.2254 after wage growth hit the fastest pace in the three months to November, while employment rose faster than expected.

Government bond markets were relatively quiet, with eurozone bond yields rising from monthly lows late last week, but global bond trading remained cautious ahead of the end of the BOJ meeting.

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As stocks rallied this year, other riskier assets also gained.

No.1 cryptocurrency Bitcoin has made nearly a quarter of gains in January, rising more than 20% in the past week alone, and is on course for its best month since October 2021. It last traded at $21,208.

Reporting by Tom Wilson in London and Ken Wu in Hong Kong; Editing by Gerry Doyle, Neil Fullick, Alex Richardson and Chisu Nomiyama

Our Standards: Thomson Reuters Trust Principles.

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