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Mounting signs of a sharp economic slowdown weighed on stocks in Asia as well as commodity prices while supporting sovereign bonds.
An Asia-Pacific equity index retreated, dragged down by Chinese tech shares on a report that social media giant Tencent Holdings Ltd. plans to sell all or a bulk of its US$24 billion stake in food delivery firm Meituan in part to appease regulators.
S&P 500 and Nasdaq 100 contracts edged lower, European contracts made modest gains and a dollar gauge was firm.
US data Monday pointed to rapidly cooling manufacturing and slumping homebuilder sentiment, adding to economic risks after weak Chinese figures.
Demand for havens helped Treasuries sustain an advance and spurred purchases of Australian and New Zealand debt. Oil slid below US$89 a barrel on worries about demand as well as the possible return of Iranian supplies.
Bets on cooling inflation and less punitive monetary tightening as the world economy slows have contributed to a near 13 percent rebound in global equities from June lows. The danger for the bounce lies in the possibility of persistent price pressures that keep borrowing costs higher for longer, leading to recession.
The Federal Reserve minutes this week will probably give a hint of the scale of the next interest-rate hike, Jin Yuejue, multi-asset solutions investment specialist at JPMorgan Asset Management, said on Bloomberg Radio.
“We’re of the view that there’s more work for the Fed to do,” she said, adding she expects the US to raise rates by another 100 basis points this year.
US data showed a gauge of New York state manufacturing activity plunged by the second-most in figures going back to 2001. US homebuilder sentiment fell for an eighth-straight month, the worst stretch since the 2007 housing collapse. Those reports followed an unexpected cut in interest rates by China on Monday ahead of figures showing the nation’s economic slowdown deepened in July. The offshore yuan stabilized after sinking in the wake of the disappointing data and monetary steps. –Bloomberg
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