China’s Gloom Overshadows Wall Street-Led Rebound, According to Reuters

A Look Ahead at European and Global Markets

The recent rebound in global share markets was short-lived in Asia on Tuesday, as disappointing economic indicators from China dampened enthusiasm and limited gains in Asian stocks.

This has led to a mixed opening in Europe, where EUROSTOXX 50 futures indicate a positive start, although another index fell by 0.3%.

Later in the day, figures on British pay growth and unemployment will be released, coinciding with the opening of London. Expectations suggest these figures will show a further reduction in inflationary pressures.

This could potentially open the door for more interest rate cuts from the Bank of England, although a cut next week might catch investors off guard, as they are currently only anticipating a slim chance of a 25 basis point reduction.

Next week, the Federal Reserve will also convene, with a 25 basis point cut appearing almost certain. However, the possibility of a larger 50 basis point move hinges on the U.S. inflation report due on Wednesday.

Regarding China, Tuesday’s trade data revealed that exports unexpectedly picked up in August, though imports fell short of expectations. This follows Monday’s consumer price figures, which suggested that rising prices were not due to increased domestic demand, as deflation in producer prices continued to worsen.

Chinese stocks faced challenges on Tuesday, dipping to a seven-month low, while the CSI Tourism Index, a measure of consumer demand, fell to an all-time low. The ongoing downward trend in Chinese equities indicates significant action is required from Beijing to restore investor confidence in its struggling market. Adding to the challenge are the increasing trade tensions.

In a notable development, the U.S. House of Representatives recently passed a bill aimed at limiting business with various Chinese biotech companies, including WuXi AppTec, on national security grounds. This has resulted in a significant drop in the Hong Kong-listed shares of WuXi AppTec, which fell more than 10% at one point.

Key market developments to watch on Tuesday include:

• The UK ILO unemployment rate for July
• The UK average weekly earnings for the three months ending in July
• The final German CPI figures for August