Global stocks fell on Monday (August 16) after several Chinese economic indicators showed a surprisingly sharp slowdown in the engine of global growth.
A 10-day run of gains for European stocks came to a halt, with commodity-linked stocks that are sensitive to demand from China falling the most. The pan-European STOXX 600 index slipped 0.5% in early trading, easing from record levels last week.
Figures on China’s July retail sales, industrial production and urban investment all missed forecasts, a trend that is only likely to get worse given the recent tightening in coronavirus restrictions in the country of 1.4 billion people.
Widespread outbreaks of the Delta variant and restrictions would be a game changer for the recovery in Asia and potentially beyond, given the likely impact on supply chains.
The sudden collapse of the Afghan government and what it may mean for political stability in the region added to uncertainty among investors.
MSCI’s All Country World Index, which tracks shares across 49 countries, fell 0.2% on Monday. U.S. stock futures also traded down, with the S&P 500 and Nasdaq futures each 0.2% lower.
Japan’s Nikkei stock index fell 1.7%, though economic growth topped forecasts for the second quarter.
China’s slowdown helped to pull 10-year Treasury yields down to 1.25%, a drop of 11 basis points in just two sessions. That also wiped out a week of gains for the U.S. dollar, sending it back to 92.547 against a basket of currencies from a near five-month top of 93.195.
In commodity markets, gold dipped to $1,771 U.S. in the wake of a sudden tumble to $1,684 U.S. at the start of last week.
Oil prices eased partly on concerns that COVID-19 travel restrictions would hurt demand, particularly in China. Brent crude oil fell 1.5% to $69.53 U.S. a barrel, while U.S. crude lost 1.7% to $67.24 U.S. per barrel.