Moving markets today: Asian stocks fall amid weak China data; oil and gold prices drop, China’s new home prices plunge. All eyes are on BOE policy decision this week
Asian stocks declined early due to concerns over a political crisis in France, amplifying global market anxiety. Central banks facing decisions this week may delay anticipated interest rate cuts. Markets in the Middle East, North Africa, and Asia will be closed Monday for Eid-al-Adha. Oil prices dipped in early Asian trading, and gold saw marginal declines as higher bond yields reduced its attractiveness. Asking prices for UK homes remained unchanged in June, according to Rightmove. Chinese industrial output growth moderated, and China’s central bank maintained its key policy rate as predicted. China’s new home prices fell at their fastest rate in almost a decade. In the US, the focus is on May retail sales, alongside updates on UK inflation, Japan’s machine orders, and PMI data comparing G7 countries and India. Trading will be subdued due to Eid al-Adha and Juneteenth holidays. Central banks in Australia, Norway, and the UK are expected to hold rates steady, while the Swiss National Bank might cut rates due to a robust Swiss franc. Here are five key takeaways for your day.
UK house asking prices flatline in June: Rightmove
According to a recent survey by property market website Rightmove, the prices asked for homes newly listed in Britain showed no change this month, indicating a slowdown in the housing market’s recent momentum. The average asking price for properties listed between May 12 and June 8 was reported at £375,110, which is just £21 lower than the previous month, marking a negligible difference statistically. Typically, prices tend to rise in June, but last year’s data for the same period also indicated stability, Reuters reported.
In a separate survey conducted by Make UK, the trade association representing Britain’s manufacturing sector, findings revealed that a significant majority of the surveyed manufacturing firms are urging the incoming government to develop a formal industrial strategy and strengthen trade ties with the European Union. The survey highlighted that 69 per cent of respondents emphasized the need for a credible industrial strategy, while 54 per cent stressed the importance of enhanced trade relations with the EU.
China faces uphill battle in economic revival efforts
In May, China’s industrial output grew less than expected, highlighting the difficulties policymakers face in addressing a severe property slump and boosting investor confidence in the world’s second-largest economy. The National Bureau of Statistics reported a 5.6 per cent year-on-year increase in industrial production, down from April’s 6.7 per cent and below the 6 per cent predicted by a Reuters poll of analysts.
Fixed asset investment grew by 4 per cent, just shy of the 4.2 per cent forecast by Reuters. On a brighter note, retail sales rose by 3.7 per cent, exceeding the estimated 3 per cent increase and up from 2.3 per cent in April.
Property investment dropped by 10.1 per cent year-on-year from January to May, worsening from a 9.8 per cent decline in the January-April period. Despite these setbacks, the job market remained stable with the nationwide survey-based unemployment rate at 5.0 per cent in May, unchanged from April. Retail sales, a crucial measure of consumer spending, increased by 3.7 per cent in May, marking the fastest growth since February and accelerating from April’s 2.3 per cent rise.
China’s new home prices plunge at record pace in nearly a decade
In May, new home prices in China dropped at their fastest rate in more than nine and a half years, as reported by official data on Monday. Despite government efforts to manage oversupply and support debt-ridden developers, the property market continues to decline.
Prices fell 0.7 per cent from the previous month, marking the 11th consecutive month of decreases and the sharpest drop since October 2014, according to Reuters calculations based on data from the National Bureau of Statistics (NBS). On an annual basis, new home prices were down 3.9 per cent compared to a 3.1 per cent decrease in April.
On another front, China’s central bank, as expected, left a key policy rate unchanged on Monday while rolling over maturing medium-term loans and withdrawing some liquidity from the banking system. The People’s Bank of China (PBOC) maintained the rate on 182 billion yuan ($25.08 billion) of one-year medium-term lending facility (MLF) loans to selected financial institutions at 2.50 per cent, unchanged from the previous operation.
What to watch this week
This week, the focus in the US will be on the May retail sales data, set to be released on Tuesday. Other important updates include UK inflation figures, Japan’s revised machine orders data, and new PMI data comparisons among G7 countries and India. Trading activity is expected to be subdued due to the Eid al-Adha holidays in Islamic countries and the Juneteenth holiday in the US
Central banks in Australia, Norway, and the UK are likely to maintain their current interest rates during their meetings this week. Meanwhile, the Swiss National Bank (SNB) might consider easing rates due to the recent appreciation of the Swiss franc.
Asian stocks decline amid escalating global risk concerns
Markets in the Middle East, North Africa, and Asia will be closed on Monday for the Eid-al-Adha holiday.
In China, the CSI300 index declined by 0.2 per cent even though retail sales exceeded expectations. Japan’s Nikkei 225 dropped 1.7 per cent, with investors now facing a six-week wait for the Bank of Japan’s next policy move.
In Europe, EUROSTOXX 50 futures rose by 0.50 per cent after significant losses last week, and FTSE futures also climbed by 0.50 per cent. In the US, S&P 500 futures remained steady, while Nasdaq futures saw a modest increase of 0.09 per cent after several record finishes.
On Friday, US stocks struggled as consumer sentiment hit a seven-month low due to ongoing concerns over high prices impacting personal finances. The S&P 500 closed slightly down, led by a decline in industrial stocks.
However, tech stocks performed well, with Adobe Inc. surging 15 per cent on a strong outlook. Meanwhile, the Stoxx Europe 600 fell by 1 per cent, and France’s CAC 40 Index experienced a significant drop of over 6 per cent last week, marking its largest decline since March 2022.
In the commodities market, gold remained stable at $2,326 an ounce following a 1.7 per cent gain last week.
Oil prices dipped slightly after a 4 per cent rally last week amid hopes for increased demand during the US driving season. Brent crude slipped 17 cents to $82.45 a barrel, and US crude also decreased by 17 cents to $78.28 a barrel.