Economic growth in the world's third-largest economy was almost twice as strong as expected in the second quarter. On the other hand, capital markets are currently looking with concern to the Chinese real estate market as China's central bank felt compelled to loosen the interest rate screw again. The sentiment on stock markets at the start of the week thus remained cautious, and the focus remains on uncertainties regarding the further inflation outlook and the corresponding direction of monetary policy.
Stock markets in the Asia-Pacific region trended inconsistently on Tuesday. In Tokyo, the Nikkei 225 posted solid gains of around 0.6% after the country's second-quarter gross domestic product significantly exceeded expectations. Japan's economy grew 1.5% from the previous quarter and 6% on an annualized basis, compared with consensus forecasts of 0.8% and 3.1%, respectively. In Australia, the S&P/ASX 200 rose by 0.4%. Markets in South Korea were closed for a public holiday. Hong Kong's Hang Seng Index, meanwhile, extended losses, falling nearly 1%, while the CSI 300, a benchmark index for mainland Chinese markets, edged lower.
The focus remains on concerns of a widening property crisis in China because of property developer Country Garden, which has run into payment difficulties. Meanwhile, China's banking regulator was said to be setting up a task force to investigate risks in the real estate market and companies. At the same time, China's latest industrial production and retail sales figures for July fell short of expectations, adding to the country's weak economic data. China's central bank China then cut interest rates on one-year loans by 15 basis points to 2.5%, easing policy rates for the second time in three months.
On Wall Street, tech stocks, which had previously come under pressure, recovered somewhat, while concerns surrounding China dampened investor risk appetite among blue chips. The Dow Jones Industrial remained virtually unchanged (+0.07%) with a close of 35'307.63 points on Monday. The S&P 500 closed 0.6% higher at 4'489.72 points. The Nasdaq indices gained about 1.2%, driven by Nvidia shares, which gained almost 7% yesterday. Tesla shares, on the other hand, lost 1.2%, falling to the lowest level in more than two months, after the electric carmaker announced renewed price cuts in China. In bond markets, the yield for ten-year US government bonds climbed again slightly higher to 4.2%.
In Argentina, the central bank sharply devalued the national currency, the peso, after populist Javier Milei scored a surprising success in the presidential primaries. The central bank devalued the peso by 18% and raised the key interest rate by 21 percentage points to 118%.
Corporate news in focus: Alcon Q2 figures, Tecan half-year figures and in the US Home Depot with Q2 figures.
Economic data in focus: UK unemployment figures July (08:00 CET), Sweden consumer prices July (08:00), Switzerland producer and import price index July (08:30), Germany ZEW economic expectations August (11:00), US retail sales July and Empire State Index August (14:30), NAHB index August (16:00).
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.