Stocks falter as China data stokes global economic concerns

LONDON (Reuters) – Stocks fell on Tuesday after slumping Chinese growth in 2022 halted a New Year’s rally and kept investors on edge about the risks of a global recession, while the Japanese yen stalled near a seven-month high ahead of schedule. The main central bank decision.

Euro Stoxx 600 (.STOXX) It lost 0.2 percent from Monday’s nine-month high. Global stocks have advanced so far in 2022, driven by hopes of a recovery in the Chinese economy and an easing of price pressures in the United States and Europe.

But Chinese data showed that the world’s second-largest economy grew by 2.9% in the fourth quarter of last year, beating expectations but confirming 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 an expansion of 2.2% after COVID-19 first emerged in 2020, it was the worst showing in nearly half a century.

Sensitive technical stock prices (.SX8P) It fell by 0.8%, which affected the STOXX 600 in general. Meanwhile, Wall Street was set to open slightly lower after a public holiday on Monday, with E-mini futures for the S&P 500 index down 0.3%.

Market players said investors are assessing how economies will expand as peak inflation slows and central bank tightening slows, with China data confirming doubts about whether it could act as a catalyst.

“What is something that will reactivate growth?” said Gail Combs, head of basic research at Unigestion. “China is unlikely to provide the support it has provided in the past, as it did during the global financial crisis.”

Earlier, Asia-Pacific shares outside Japan (.MIAPJ0000PUS) Losses widened in response to Chinese data, as it closed down 0.4%. stocks in Hong Kong (.for him) China’s CSI300 fell 0.8%. (.CSI300) He recovered losses to close flat.

The Bank of Japan is under pressure

Around the world, the R-word still looms large.

Two-thirds of the leading public and private economists surveyed by the World Economic Forum in Davos expect a global recession this year, with around 18% considering it “very likely” – more than double the number in the previous poll, conducted in September 2022.

Currency traders have been focusing on central banks.

The Japanese yen remained near seven-month highs as investors held their breath for a possible policy shift at the Bank of Japan.

The yen settled around 128.78 after peaking at 127.22 per dollar on Monday, with traders bracing for sharp moves when the Bank of Japan wraps up its two-day meeting on Wednesday.

The Bank of Japan is under pressure to change interest rate policy as soon as Wednesday, after its attempt to buy breathing room backfired, encouraging bond investors to test its resolve.

The dollar index rebounded from its lowest level in seven months at 101.77, which it recorded a day earlier, and settled at 102.27, while the pound sterling rose after the pace of wage growth in Britain, which is closely watched by the Bank of England as it measures the amount of interest increase. rates accelerate again.

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

Government bond markets have been relatively quiet, with eurozone bond yields up from month-to-month lows hit late last week, but bond trading globally was cautious ahead of the BoJ meeting outcome.

As stocks have risen this year, other riskier assets have also gained.

Bitcoin, the number one cryptocurrency, posted gains of about a quarter in January, jumping more than 20% in the past week alone, putting it on track for its best month since October 2021. It was last trading flat at $21,208.

Additional reporting by Tom Wilson in London and Ken Wu in Hong Kong; Editing by Jerry Doyle, Neil Vollick, Alex Richardson and Chizu Nomiyama

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