by On Monday, the US dollar, along with global equities, recorded gains, even though economic data in China turned out to be weaker than expected.
This prompted the Chinese central bank to reduce its lending rate, fueling fears of a global recession once more.
China’s situation
The July data for the second largest economy in the world turned out to be disappointing, as retail sales and industrial output ended up missing analysts’ estimates.
This prompted the People’s Bank of China (PBoC) to unexpectedly reduce its key lending rates. The activity in its prominent manufacturing hubs, as well as its popular tourist spots, has faltered.
This is primarily because of the strict COVID-19 policy of Beijing that has affected Shanghai as well. Moreover, the property market in the country is also experiencing a downturn that continues to deepen.
Market analysts said that China was seeing a slowing trend that had only intensified due to COVID lockdowns.
They added that their credit problems, particularly due to real estate developers, would limit their aggressive policy in terms of stimulation.
Markets rise
After recording losses earlier in the session, markets climbed higher slightly. There was a 0.23% rise in the MSCI world equity index that keeps track of shares of about 50 countries.
As for Asian markets, the MSCI’s index of Asia-Pacific shares, excluding Japan, ended the day lower by 0.34% in overnight trading.
After disappointing data prompted the Chinese central bank to cut its rates, the US dollar recorded gains. There was a 0.785% gain in the US dollar index, measuring the currency against its peers.
Meanwhile, the euro lost 0.97% against the greenback to trade at $1.0158. There was also a more than 3% fall in oil prices because of demand worries after weak Chinese data, as it is one of the largest crude importers.
There was a 3.1% drop in Brent crude futures to $95.10 per barrel, while a 2.9% drop was seen in US West Texas Intermediate crude, which ended the day at $89.41.
Wall Street performance
As far as Wall Street is concerned, most major indexes recorded gains, as they reversed losses earlier in the session.
This came after recording gains for four weeks in a row and a possible moderation in the interest rate hikes by the US Federal Reserve after inflation showed a slowdown.
There was a 0.42% gain in the Dow Jones Industrial Average, which saw it reach 33,903.57, while a 0.37% gain saw the S&P 500 reach 4,296.09.
A 0.59% gain was also recorded in the Nasdaq Composite, which saw it reach 13,123.89. There was a slight fall in US Treasury yields, as the market continued to assess the impact of the inflation slowdown.
There was a more than 1% decline in gold prices, which brought it to its lowest in a week. Precious metals recorded sharp declines on Monday because of a stronger US dollar.
There was also more pressure on the bullion due to concerns about further interest rate hikes by the US Federal Reserve.
