Global shares mostly fell on Tuesday after a lower-than-expected Chinese interest rate cut, while a pullback in US markets suggested a rally was running out of steam.
Like European shares, Asian shares were also mostly down. All three major US indices also retreated, with the S&P 500 down 0.5 per cent.
London shares firmed on the eve of key UK inflation data and ahead of Thursday’s expected interest rate hike from the Bank of England.
ActiveTrades analyst Ricardo Evangelista said: “Developments in China, where the central bank cut its reference interest rate by ten basis points, point to a predicted post-pandemic slowdown in the world’s second-largest economy.” “
“With China’s economy struggling to regain momentum, difficulties have intensified for the global economy,” he warned.
The People’s Bank of China cut its benchmark five-year rate by 10 basis points, well short of an expectation of 15 basis points, though it met forecasts for a one-year rate cut of 15 basis points.
Traders were frustrated by the lack of action by Beijing to kickstart the country’s massive economic recovery.
CMC Markets analyst Michael Hewson said the general consensus was that the PBOC’s “measure won’t make much difference and it is tinkering around the edges.”
The move came after the PBOC cut two other key rates last week and pumped billions into financial markets.
Hong Kong shares fell more than a percent in response, with tech firms – which are more susceptible to higher borrowing costs – bearing the brunt of the selling, while property companies also declined.
Shanghai was also in the negative zone, but Tokyo gained ground.
Rally over? ,
Wall Street stocks slipped early in trading in a week where Federal Reserve Chairman Jerome Powell’s semi-annual appearance before lawmakers will be closely scrutinized.
“US markets are back from their long weekend with a lower open as doubts about the sustainability of the current rally begin to creep in,” said Hewson of CMC Markets.
Briefing.com analyst Patrick O’Hare said that although the rally in stock prices in recent weeks is based on the belief that the Fed has completed or is about to raise interest rates, the rally may not be over yet. Is.
He added that the rally’s “resilience to selling efforts has been a driver of the extended winning streak, which has prompted short sellers to cover positions and investors to redistribute cash for fear of missing out on better inflation-adjusted returns.” Inspired to apply.”
In company news, Chinese e-commerce giant Alibaba said it would replace its top boss in a surprise move as it recovers from years of slow growth.
Daniel Zhang, Chairman and CEO, will be replaced by Joseph Tsai as Chairman and Eddie Wu as CEO, effective September 10.
Alibaba shares fell 1.5 percent in Hong Kong and 4.5 percent in New York.
– Key figures around 2020 GMT –
New York – Dow: down 0.7 percent at 34,053.87 (close)
New York – S&P 500: Down 0.5 percent at 4,388.71 (close)
New York – Nasdaq: down 0.2 percent at 13,667.29 (close)
London – FTSE 100: down 0.3 per cent at 7,569.31 (close)
FRANKFURT – DAX: down 0.6 percent at 16,111.32 (close)
Paris – CAC 40: Down 0.3 percent at 7,294.17 (close)
Euro STOXX 50: Down 0.4 percent at 4,343.14 (close)
Tokyo – Nikkei 225: Up 0.1 percent at 33,388.91 (close)
Hong Kong – Hang Seng Index: down 1.5 percent at 19,607.08 (close)
Shanghai – Composite: down 0.5 percent at 3,240.36 (close)
EUR/USD: down to $1.0918 from $1.0921 on Monday
Pound/dollar: down from $1.2792 to $1.2766
Dollar/yen: down from 141.98 yen to 141.40 yen
Euro/Pound: up 85.38 pence to 85.50 pence
Brent North Sea crude: down 0.3 percent to $75.90 a barrel
West Texas Intermediate: Down 1.0 percent at $70.50 a barrel
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – AFP,