{"id":603596,"date":"2023-08-16T00:00:00","date_gmt":"2023-08-16T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2023\/08\/16\/china-slowdown-us-banks-weigh-on-global-stocks\/"},"modified":"2023-08-16T00:00:00","modified_gmt":"2023-08-16T00:00:00","slug":"china-slowdown-us-banks-weigh-on-global-stocks","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2023\/08\/16\/china-slowdown-us-banks-weigh-on-global-stocks\/","title":{"rendered":"China slowdown, US banks weigh on global stocks"},"content":{"rendered":"

It wasn\u2019t a great day for global stocks yesterday<\/strong>, with equities in Asia, the Middle East, the US and Europe all closing in the red. So what\u2019s moving the markets?<\/p>\n

#1- Trouble in China: <\/strong> Slowing exports, falling factory activity, deflation and a gathering storm in the real estate sector, global markets are getting nervous about the direction the Chinese economy is heading in. A surprise decision yesterday by the People\u2019s Bank of China to lower interest rates<\/a> was undercut by a fresh batch of poor data indicating slowing retail sales and below par industrial production. Then there is the uncertain fate of the country\u2019s largest real estate developer<\/a> Country Garden, which is scrambling to avoid defaulting on its debt next month, an event that would have huge consequences for the world\u2019s second-largest economy.<\/p>\n

#2- Interest rate uncertainty: <\/strong> China weakness is bad, but unexpectedly strong data out of the US might not be great news either. Above-forecast retail sales figures<\/a> out yesterday raised doubts about the future path for US interest rates. With the market operating on the basis that the Federal Reserve is close to calling time on its aggressive tightening cycle, the strong economic data, coupled with remarks<\/a> made yesterday by a top Fed official, has injected new uncertainty about whether the central bank could have another few rate hikes in the bag as it tries to get inflation down to target.<\/p>\n

#3- US banks continue to be a concern: <\/strong> US banking stocks sold off yesterday after a Fitch Ratings analyst suggested<\/a> that the rating agency could downgrade the credit ratings of more than 70 US banks should it cut its industry rating. JPMorgan and Bank of America, the country\u2019s two largest banks by assets, would be among those facing downgrades. The analyst\u2019s comments come less than a week after Moody\u2019s cut the ratings<\/a> of 10 smaller banks and warned that six of the country\u2019s largest financial institutions could also be downgraded.<\/p>\n

The sell-off is continuing this morning: <\/strong> Most Asian markets are nursing hefty losses this morning, with the Hang Seng down 1.3%, and the Nikkei and the Kospi both 1.2% in the red. European equity futures are also in the red this morning, though US shares are poised to rise at the opening bell.<\/p>\n

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European gas prices spike again as Australia LNG strike talks continue: <\/strong> The threat of strike action at several Australian LNG terminals<\/a> is continuing to cause nervousness in the European energy markets, with natural gas futures surging 13% yesterday, according to Bloomberg<\/a>. The price spike \u2014 the second in less than a week \u2014 came as discussions yesterday between union officials and key LNG player Woodside Energy Group failed to resolve the impasse. The ongoing dispute could see workers at three major LNG terminals walk out, potentially taking up to 10% of global supply off the market.<\/p>\n

Global trade appears to be heading for a downturn: <\/strong> Asia\u2019s largest exporters recorded heavy y-o-y declines in shipments in June and July, according to Asia Times<\/a>. South Korea and India both fell 16% during the two-month period, while China declined 9.2% in July. Singapore (-19.3%), Vietnam (-15%) and Taiwan (-10.4%) also experienced serious slowdowns last month.<\/p>\n

ALSO WORTH NOTING- <\/strong><\/p>\n