NEW YORK/LONDON (Reuters) – Global stocks fell and the dollar fell on Monday after data showed the Chinese economy was growing slower than expected, but US stocks rose on expectations that corporate profits will beat expectations and that the US consumer will. Keep spending.
China reported growth of 0.8% in the second quarter, above expectations of 0.5%, while the annual pace slowed more than expected to 6.3%, well below forecasts of 7.3%.
Analysts said the data suggests China’s post-COVID boom is over. But fears in the United States earlier in the year of a hard economic downturn dissipated as slowing consumer inflation brightened the outlook in the United States as companies reported second-quarter results.
said Anthony Saglimben, chief strategist at Ameriprise Financial in Troy, Michigan.
“What the market will be looking for over the next few weeks is whether demand stops and is the business outlook still generally positive for the rest of the year?”
Tesla is the first among the big tech names to be reported this week, along with Bank of America, Morgan Stanley, Goldman Sachs and Netflix.
Equities in Europe were weaker, with the pan-European STOXX 600 index (.STOXX) down 0.60% while the MSCI US worldwide stock index (.MIWD00000PUS) was down slightly by 0.01%.
On Wall Street, the Dow Jones Industrial Average (.DJI) rose 0.18%, the S&P 500 (.SPX) rose 0.20%, and the Nasdaq Composite Index (.IXIC) rose 0.47%.
The dollar traded flat against a basket of currencies after suffering its largest weekly drop in 2023 last week as Treasury yields plunged.
The currency is likely to consolidate as investors await next week’s Federal Reserve meeting, where the US central bank is widely expected to raise interest rates by another 25 basis points.
Tuesday’s retail sales will be the main US economic data for the week, although the news is unlikely to affect the course of monetary policy or the direction of the market.
Data on US retail sales is expected to show a 0.3% rise outside of autos, continuing the slower trend, but strong enough to align with the market’s favored soft landing notion.
Futures are priced at an additional 32 basis points to narrow this year, with the benchmark price expected to peak at 5.40% in November. This means that the market sees a low chance of further rate hikes after the Fed concluded its two-day meeting on July 26th.
The dollar index fell 0.002%, with the euro rising 0.02% to $1.1229.
US Treasury yields fell sharply last week as a slowdown in consumer and producer price inflation in June raised expectations that pricing pressures will continue to ease and lead to more dovish monetary policy.
The two-year Treasury yield, which is usually in line with interest rate expectations, rose 1.5 basis points to 4.766%, while the 10-year Treasury note rose 1.4 basis points to 3.834%.
Sterling reversed course, falling 0.2% to $1.3089 ahead of this week’s UK inflation figures, where another higher reading will increase the risk of further sharp hikes in interest rates.
“A lift in core CPI could encourage financial markets to set more hawkish rates from the BoE and push GBP/USD higher towards ascending 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 crude was at $79.22, down 0.81%.
Additional reporting by Herbert Lash and Karen Britel in New York, Amanda Cooper in London and Wayne Cole in Sydney; Editing by Lincoln Feist, Christina Fincher and Barbara Lewis
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