Stocks fall, dollar firms as fears of growth stifle sentiment

  • European equities rise 0.3% on defensive names
  • Markets generally tempered by fears of growth in China and the US
  • Dollar rises as investors seek safety

LONDON, Aug. 16 (Reuters) – European stocks moved slowly higher on Tuesday as investors sought safety in defensive names, while risk aversion also lifted the safe-haven dollar after weak Chinese and US economic data fueled fears of a global recession.

The dollar briefly hit a week-long high as investors pulled back on dumping the greenback last week after lower-than-expected US inflation data as the Aussie, euro and Chinese yuan collapsed.

Europe’s benchmark STOXX index (.STOXX) climbed 0.3% to reach a 10-week high, marking a fifth consecutive session of gains led by mining companies as London-listed BHP Group reported strong results.

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But S&P 500 futures and Nasdaq futures fell, pointing to a likely weaker direction for US markets when they open later.

MSCI’s broadest index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) fell 0.03% from gains earlier in the day. MSCI’s benchmark index is up 5% from year-to-date lows, but is still down 15% this year.

Just as investors took heart from a four-week rally in global equities that pushed markets to their more than three-month high, Monday’s weak Chinese activity data on industrial production and retail sales hit sentiment. read more

Confidence in US single-family homes and factory activity in New York State also fell to their lowest levels since the start of the COVID-19 pandemic in August, further signifying that the world’s largest economy is weakening as the Federal Reserve shuts down. interest increases. read more

The picture was split across Asian stock markets on Tuesday, with benchmarks for Tokyo (.N225) and Taiwan, while South Korean stocks (.KS11) were trading 0.2%.

Chinese equities gave up early gains as growth concerns persisted after data showed that economic activity and credit expansion slowed sharply in July, prompting the central bank to cut interest rates unexpectedly.

The blue-chip CSI 300 index (.CSI300) fell 0.2% after a dip on Monday.

Meanwhile, bond markets continue their battle between fears of inflation and recession, which are particularly acute in the eurozone.

The German 10-year yield, the benchmark for the eurozone, rose 3 basis points (bps) to 0.932%, remaining below a two-week high of 1.025% reached last Friday.

DOLLAR PORT

Investors’ latest move to dollar safety came after a string of weak global economic indicators.

The US economy contracted in the first and second quarters, fueling debate over whether the country is in recession or will soon be. read more

On Tuesday, the dollar index, which measures the greenback against six major competitors, rose to 106.87, the strongest since Aug. 8.

The euro, the most heavily weighted currency in the dollar index, fell 0.28% to 1.01305.

The Australian and New Zealand dollars were placed on the defensive by weak global data.

Brent oil futures fell 1% to $94.11 as gloomy economic data from China’s largest crude oil buyer raised concerns about a global recession, and the market followed talks of a revived deal that would see more Iranian oil would allow exports. read more

WTI crude oil futures fell 0.98% to $88.52 a barrel.

Spot gold fell slightly to $1,775.6 an ounce as the stronger dollar dented the precious metal’s appeal and investors looked for signs of future federal reserve rate hikes.

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Additional reporting by Anshuman Daga, editing by Jacqueline Wong, Robert Birsel and Ed Osmond

Our Standards: The Thomson Reuters Trust Principles.

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