Global stocks steady as investor weigh China GDP

World shares were steady near recent 15-month highs and the dollar held close to a one-year low on Tuesday as investors paused to take stock of weak economic data from China and waited for US retail sales data and earnings.

Asian stocks fell earlier in the session as markets caught up with GDP data from Monday that indicated the post-pandemic bounce in China’s economy was over.

Deutsche Bank said it was lowering its forecast for China’s economic growth this year after similar moves on Monday by JPMorgan, Morgan Stanley and Citigroup.

At 8.06am GMT, the MSCI World Equity index was little changed at 697.27 points, near the April 2022 high of 698.39 reached on Friday.

European shares made minimal gains, with the Stoxx 600 and London’s FTSE 100 both up 0.2%, and Germany’s DAX 0.1%.

“China is super important to Europe,” said Fiona Cincotta, senior markets analyst at City Index. “There are a lot of concerns about what weakness in China could mean for Germany and the German economy and I think we’re seeing that being played on in the DAX, which is struggling to push higher.”

Investors were waiting for US retail sales and industrial production figures later in the day, which could give indications about the Federal Reserve’s policy outlook.

The Fed, the European Central Bank (ECB) and the Bank of Japan hold policy meetings next week.

“Any sense that the Federal Reserve has reached peak interest rates or any sense that they’re turning less hawkish or more dovish will be that injection that stocks need to take the next leg higher,” Cincotta said.

Expectations that the Fed and ECB will diverge on rate hikes have caused the dollar to weaken recently.

Money markets have largely priced in a 25 basis-point rate hike from the Fed at its policy meeting later this month, though there are expectations rates will come down as early as December.

Conversely, investors expect the ECB and the Bank of England to extend their rate-hike cycle.

The US dollar index was down 0.1% at 99.792 points, having reached its lowest since April 2022 on Friday.

The euro hit a fresh 17-month high of $1.1276 at 7.32am GMT, before paring the gain to 0.1% at $1.1237 .

Eurozone government bond yields were down, with the German 10-year yield at the lowest since July 3 at 2.368%, down about 8 basis points.

Benchmark 10-year notes were 4 basis points, yielding 3.7579%.

Investor are also keeping an eye on quarterly earnings this week, with Bank of America, Morgan Stanley and Goldman Sachs scheduled to report.

Tesla reports later in the week, which will enable the market to take a closer look into how large US corporations are faring after the recent equities rally.

Spot gold was up 0.33% at $1,961.1 an ounce.

Reuters