Chinese stocks retreated on concerns over slowing growth and a property sector meltdown
Asian stocks were mostly lower on Tuesday, with Hong Kong’s Hang Sang shedding more than 2% amid a sell-off in real estate shares amid profit-taking following recent gains fueled by government efforts to support the property industry. Chinese stocks retreated on concerns over slowing growth and a property sector meltdown. A private survey showed that Chinese service sector activity grew less than expected last month. Japan’s Nikkei 225 fell slightly after data showed household spending slowed more than expected in July. However, the index managed to turn slightly positive afterwards.
Following suit, European equities fell on Tuesday as well, with the Stoxx 600 index shedding nearly 0.5% after early deals. Construction and retail stocks were leading losses. On the data front, the ECB’s monthly survey showed that inflation expectations among Eurozone consumers remained unchanged in July, while those for three years ahead edged up. Meanwhile, Euro zone producer prices fell for a seventh consecutive month in July. The PPI fell 0.5% in July from June and by 7.6% year-on-year while economists had expected a monthly fall of 0.6% and a 7.6% year-on-year decline.
Against this backdrop, EURUSD fell after modest gains during the previous session. The euro came under renewed selling pressure amid a combination of weak economic data out of the Eurozone and a stronger dollar. The USD index keeps climbing north, challenging late-May highs around 104.50. The greenback is buoyed by a risk-off environment across global financial markets, with rising Treasury yields adding to the upbeat tone surrounding the US currency. Should the euro fail to hold above 1.0740, the pair may target the 1.0700 figure next.
In other markets, oil prices hold steady around November highs, treading water below the $89 figure that now represents the immediate barrier for buyers. In part, Brent crude struggles to extend the ascent today due to risk aversion. Still, oil futures refrain from a deeper retreat, slinging to the upper end of the extended trading range. If the upside pressure reemerges, oil prices may challenge the $90 mark this week. Otherwise, a local downside correction could take place in the near term.
