© Reuters. FILE PHOTO: An investor looks at an electronic board displaying stock information at a brokerage house in Beijing, August 27, 2015. REUTERS / Jason Lee / File Photo
By Wayne Cole
SYDNEY (Reuters) – Asian stock markets slipped on Monday after a series of Chinese data showed a surprisingly sharp slowdown in the global growth engine, as did most of the global races to stem the spread of the Delta variant of COVID -19 with vaccinations.
Figures on July retail sales, industrial production and urban investment are all missed forecasts, a trend that will only worsen given the recent tightening of restrictions on coronaviruses there.
“Asia’s low vaccination rates and low tolerance for community spread suggest that this is the region most economically at risk for the Delta variant,” said JPMorgan (NYSE 🙂 economist Bruce Kasman.
“China is in the process of removing political support, which seems likely to dampen the growth of domestic demand and weigh on regional performance until the end of the year,” he added. “With these slowdowns that have accumulated in recent weeks, we have lowered regional growth forecasts to 2H21.”
There was further uncertainty over the possible geopolitical implications of the sudden collapse of the Afghan government and what it means for political stability in the region.
The largest MSCI index of Asia-Pacific stocks outside of Japan fell 0.2%, climbing back to year-long lows hit last month.
Chinese blue chips were hanging on to gains of 0.3%, possibly in anticipation of more aggressive policy easing from Beijing.
fell 1.8%, although economic growth exceeded expectations for the June quarter.
Futures contracts on the Nasdaq and both fell 0.2%. EUROSTOXX 50 futures were down 0.4% and futures were down 0.6%.
Wall Street set new records last week even as a survey showed U.S. consumer confidence plummeted to its lowest since 2011 amid fears from Delta.
The dismal report reduced 10-year Treasury yields to 1.27%, after a sharp 8bp drop on Friday that erased a week of steady gains.
It also erased a week of gains for the dollar, returning it to 92.517 against a basket of currencies from an almost five-month high at 93.195.
The euro rebounded to $ 1.1799 and moved away from major chart support at $ 1.1740, while the dollar fell to 109.36 yen, leaving behind last week’s high of 110.79 .
Kim Mundy, a senior currency strategist at the CBA, argued that the dollar could recover this week if the minutes of the Federal Reserve’s latest policy meeting confirmed a hawkish turn on reduction.
The minutes are released on Wednesday as Fed Chairman Jerome Powell speaks on Tuesday.
“We expect the FOMC to announce that it will decrease its monthly asset purchases in September if the August payroll is strong,” Mundy said.
“We believe that a tapering announcement next month is not widely expected, so if the minutes show that the FOMC has discussed the possibility of announcing a tapering as early as September, we expect the dollar to rebound. “
In Asia, the Malaysian ringgit fell to its lowest level in a year following reports that the country’s prime minister was about to step down.
In the commodities markets, gold extended its rebound to $ 1,778 following a sudden drop in stop-losses to $ 1,684 early last week.
Oil prices have partly eased over fears that coronavirus-related travel restrictions will hurt demand, especially in China.
fell 78 cents to $ 69.81 a barrel, while it lost 80 cents to $ 67.64.