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Chinese and European stocks fell on Tuesday as investors worried over the outlook for global economic growth after downbeat business surveys from China and the eurozone.
Europe’s region-wide Stoxx 600 was down 0.2 per cent, paring larger early-morning losses, while France’s Cac 40 dropped 0.4 per cent and Germany’s Dax gave up 0.2 per cent.
Futures contracts tracking Wall Street’s benchmark S&P 500 slipped 0.1 per cent and those tracking the tech-focused Nasdaq 100 declined 0.2 per cent, as US markets prepared to reopen after a holiday.
In China, the benchmark CSI 300 declined 0.7 per cent and Hong Kong’s Hang Seng was down 2.1 per cent, erasing most of the gains both indices made a day earlier after news of fresh government support for the property sector.
Monday’s rally gave way to rekindled anxiety over the health of the world’s second-largest economy, after private survey data showed that service sector activity in August declined to its slowest rate since Xi Jinping’s coronavirus controls were lifted at the start of the year.
The Caixin Services Purchasing Managers’ index came in at an eight-month low of 51.8 last month, down from 54.1 in July and below the 53.6 forecast of economists polled by Reuters. The reading approached the neutral 50-mark which separates expansion from contraction.
The shares of China’s troubled developer Country Garden fell 1 per cent, paring larger losses from earlier in the day, after the company narrowly avoided a default by making late payments on two dollar bonds within their grace periods.
The developer, which some investors see as a gauge for the health of China’s once-dominant property sector, initially missed those payments in early August and was granted a grace period that had been set to expire this week.
The Hang Seng Mainland Properties index declined 2.8 per cent on Tuesday, a day after Beijing vowed to extend greater support to the property sector, which has struggled from weak demand since the country reopened from three years of strict pandemic lockdowns.
Over the weekend, the government encouraged lenders to cut interest rates on existing mortgages and introduced policies that would allow a dozen of China’s largest cities to reduce initial payments for homebuyers.
In the eurozone the HCOB Composite Purchasing Managers’ index fell to 46.7 in August, down from 48.6 in July, its lowest level since November 2020.
The survey said it was “one of the softest 12-month outlook in 2023 so far” and there was a “near-stalling” of jobs growth.
Traders are putting a 72 per cent probability on the central bank keeping rates on hold, according to data complied by LSEG and based on interest rate derivatives prices.
Australia’s S&P/ASX 200 declined 0.1 per cent after the Reserve Bank of Australia kept interest rates steady as expected, but noted that further tightening could be required. The Australian dollar dropped 1.3 per cent against the US dollar.
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