Sunday, October 1, 2023

Shares fall ahead of vote on US debt deal; China’s figures disappoint

by Amanda Cooper

LONDON (Reuters) – Global shares fell on Wednesday ahead of a key vote in Washington on the US debt ceiling, while commodities and the Chinese yuan came under pressure after faltering growth data on the world’s second-largest economy.

* MSCI’s index of global shares was headed for its first monthly decline since February, down 0.4% mainly due to losses in Asian markets. US stock index futures were down 0.4%.

* Data showed China’s manufacturing activity fell more than expected in May, while services growth – which has been one of the few bright spots in its patchy recovery – slowed to its slowest pace in four months .

* For investors hoping for a sustained rebound in Chinese growth after the lifting of tough COVID restrictions late last year, the data offered further evidence that the economy is running out of steam, further lowering the global outlook Used to be.

* The yuan fell to its lowest level since last November, when China was under public health restrictions. The currency was down 0.5% at 7.124 per dollar after a series of weak data on industrial profit, retail sales and credit growth, ending its decline of 2.6% for the month.

* In Europe, equities came under selling pressure for the third day. The regional STOXX 600 index hit a two-month low, led by declines in China-focused luxury stocks such as LVMH, Burberry and Swatch Group.

* The dollar, which was up 0.4% against a basket of currencies, is on track for its biggest monthly gain since September, helped by safe-haven flows stemming from concerns over US debt ceiling talks.

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* The euro was down 0.7% after data eased consumer price pressures sharply in both France and Germany, the region’s two biggest economies.

* However, the data did not have much impact on interest rate expectations. Currency markets on Wednesday showed traders expect the European Central Bank to raise rates in September to a maximum of 3.70%, now at 3.25%, little changed from Tuesday’s close.

* Meanwhile, US Treasury yields fell after a deal to suspend the country’s debt ceiling and prevent default was passed overnight by a House committee. The bill will be debated on Wednesday, and its approval will send it to the Senate, where debate could last through the weekend.

* The benchmark 10-year yield, which has fallen 17 basis points (bps) in the past two days, was trading at 3.65%, its lowest level since May 19. The two-year yield fell 5 basis points to 4.428%.

* In commodity markets, copper was set for a second monthly decline after Chinese data and fell 0.8% to $8,062 a tonne, while Brent crude, which has fallen 10% this month, was down 2.4% at $71.76 a tonne. There was a barrel.

(Additional reporting by Tom Westbrook in Singapore; Editing in Spanish by Ricardo Figueroa)

World Nation News Desk
World Nation News Desk
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