Growth shocks cause stocks and bonds to falter

A man looks at stock quotes on an electronic board outside a brokerage house on March 20, 2023 in Tokyo, Japan. REUTERS/Androniki Christodoulou/File Photo Get license rights

LONDON/HONG KONG, Sept 6 (Reuters) – Global shares fell on Wednesday as growth in China and Europe slowed, while the dollar firmed as investors weighed the outlook for Federal Reserve interest rates.

MSCI’s broad gauge of world shares (.MIWD00000PUS) was down 0.1% by 0845 GMT.

European shares fell, extending losses for a sixth straight session, dragged down by global recession fears and higher crude prices.

The pan-European STOXX 600 index (.STOXX) was 0.8% off a one-week low by 0845 GMT.

Germany’s industrial orders fell more than expected in July, the Federal Statistics Office said. Euro zone construction PMIs and retail sales data are due later in the day.

In Asia, the Hang Seng Index (.HSI) shed 150 points and China’s benchmark CSI300 Index (.CSI300) fell 0.22%, as China’s exports contracted at the slowest pace in August.

Chinese investor sentiment was also shaken after a private sector survey on Tuesday showed services activity expanded at the slowest pace in eight months in August, reflecting weaker demand.

“The main risks that could undermine stock sentiment in September include developments in China’s property market and possible increases in food and energy prices,” said Bruno Schneller, managing director of INVICO Asset Management.

China is also set to release data on debt and inflation in the coming days.

Another concern, Schneller said, is that any discussion of further oil production cuts could rekindle inflation concerns and dampen investor confidence.

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Brent crude oil rose above $90 a barrel on Tuesday after Saudi Arabia and Russia said they would extend supply cuts until the end of 2023. Brent and US West Texas Intermediate crude futures were down 60 cents at $89.37 and $86.05 by 0845 GMT. respectively.

Adding to the gloomy mood, manufacturing activity slowed in Germany, Britain and the euro zone, while their service sectors fell into contraction territory.

“The European data was very weak. We think there is a high chance of a slight slowdown in the US and Europe by the end of this year or early next year,” said Redmond Wong, greater China market strategist at Saxo Markets. .

As the U.S. returns from its Labor Day holiday, traders have seen more than $36 billion in corporate bond issuance coming to market this week, and $120 billion in investment-grade dollar-denominated issuance expected this month, a Deutsche Bank strategist noted. Jim Reid on Wednesday.

“Pressure on U.S. Treasury yields comes as investors hedge against interest rate risk,” Reid said in a note.

The U.S. 10-year Treasury yield fell 2.6 basis points to 4.242% on Wednesday, having touched a session high of 4.274%, its highest since Aug. 25, while the U.S. dollar rose near six in earlier trade. Against a basket of currencies – the monthly high.

Investors are digesting the latest signals of a US interest rate hike. Federal Reserve Governor Christopher Waller said on Tuesday that the latest round of economic data gave the U.S. central bank room to consider whether to hike again.

The Institute for Supply Management (ISM) releases the US Services PMI on Wednesday.

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Spot gold was down 0.1% at $1,923.01 an ounce by 0835 GMT, posting its biggest one-day loss since Aug. 1 on Tuesday.

Report by Nell Mackenzie and Ken Wu; Editing by Edmund Claman and Sam Holmes

Our Standards: Thomson Reuters Trust Principles.

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