Mainland Chinese and Hong Kong equity markets fell on Monday after data showed China’s economy grew more slowly than expected in the third quarter, clouding the global recovery outlook and weighing on regional stocks.
Analysts said comments by Xi Jinping on Friday, calling on progress on a long-awaited property tax, also hurt sentiment, already weighed down by rising oil prices.
Oil prices extended a recent rally amid a global energy shortage to hit multi-year peaks, with U.S. crude touching a seven-year high and Brent a three-year peak.
China’s gross domestic product (GDP) grew 4.9% in July-September from a year earlier, the weakest pace since the third quarter of 2020, as the world’s second-largest economy grappled with power shortages, supply bottlenecks, sporadic COVID-19 outbreaks and debt problems in its property sector.
Chinese blue chips were down 1.55% and the Hong Kong benchmark lost 0.54%, although most of the falls came right after the bell, prior to the release of the data.
“The numbers are actually much weaker than what we thought… I think in the fourth quarter it will be even slower because we will see more impact from the energy crunch,” said Woei Chen Ho, economist at UOB.
But David Chao, global market strategist for the Asia Pacific (ex-Japan) region at Invesco, said Xi’s comments about higher taxes had been the catalyst for the stock fall, seeing grounds for optimism in the GDP data, including the stronger retail sales.
Regional benchmarks were weighed down by Chinese stocks. MSCI’s broadest index of Asia-Pacific shares outside Japan was last down 0.34%, while Japan’s Nikkei lost 0.15%.
U.S. stock futures, the S&P 500 e-minis, fell 0.3%, while pan-region Euro Stoxx 50 futures lost 0.4% and FTSE futures shed 0.35%
Shane Oliver, chief economist at AMP, said investors also continued to worry about global inflation, which was being driven by the reopening of many economies after COVID-19 restrictions and supply chain issues.
On Monday, data showed New Zealand’s consumer price index rose 2.2% rise in the third quarter, the biggest rise in over a decade, causing the local dollar to jump as much as 0.5%
Some other currencies are also responding to rising inflation expectations, as investors increasingly bet central banks will have to raise rates.
The dollar edged higher against a basket of its peers to 94.11, in sight its one-year high of 94.563 hit last Monday, as traders position themselves for a looming tapering of the Federal Reserve’s massive bond buying programme.
Against a stronger dollar, sterling fell 0.2% despite hawkish comments from Bank of England Governor Andrew Bailey over the weekend.
The yen meanwhile hovered near its lowest in nearly three years against the dollar, as the Japanese central bank looked increasingly likely to trail behind other monetary authorities in terms of rate hikes.
High energy costs are driving some of the inflation fears and U.S. crude was last up 1.6% at $83.59 a barrel, while Brent crude was last 1.19% higher at $85.87 per barrel.
Gold gained 0.01% at $1,768.7 an ounce, after falling 1.5% on Friday as upbeat retail sales drove U.S. bond yields higher.
Bitcoin traded at $62,300, not far from a record of $64,895 hit in April. It gained last week on hopes that U.S. regulators would allow a cryptocurrency exchange-traded fund to trade.