Markets wary of Fed rate plans, China retail disappoints

By Wayne Cole and Alun John

Bạn đang xem: Markets wary of Fed rate plans, China retail disappoints

SYDNEY/LONDON (Reuters) -Shares around the world nudged lower on Monday on soft economic numbers from China and Europe and as surging bond yields challenged equity valuations, at the start of a week packed with central bank meetings and major economic data.

Figures from China showed retail sales rose just 3.0% in November, compared with a year earlier, well below market forecasts of 4.6% and evidence of the need for much more aggressive stimulus. Industrial production was much as expected, while house prices were still falling, though at a slower pace.

The data showed China “is not yet out of the woods”, said Erin Xin, Greater China economist at HSBC in a note, adding she expected China to ease monetary policy further and expand support for consumption and the property sector, though details may not come until 2025.

China’s blue chip index eased 0.5%, having dropped more than 2% last Friday.

Over the weekend, an official at China’s central bank said it had room to further cut the reserve requirement ratio, the amount of cash banks must hold as reserves, though credit numbers out last week showed past easing had done little to boost borrowing.

European stocks also nudged down, off 0.1%, not helped by soft business activity data from Germany, which showed a sixth straight month of contraction, and France. That left MSCI’s world share index a fraction lower. U.S. share futures held steady.

Investors were also digesting ratings agency Moody’s unexpectedly downgrading France on Friday.

Xem thêm : French government bonds under pressure after Moody’s downgrade

The action came a few hours after French President Emmanuel Macron appointed veteran centrist Francois Bayrou as the country’s fourth prime minister in a year.

French government bonds slightly underperformed German bunds in early trading Monday. [GVD/EUR]

Political uncertainty was also clouding South Korea, where the finance ministry promised to support markets after the impeachment of President Yoon Suk Yeol. Stocks in Seoul and the won were both down slightly on Monday but in line with Asian peers. [.KS]

EYEING CENTRAL BANKS

The big events of the week are central bank meetings, and market pricing shows rate-setters in the United States and Sweden are expected to cut, while policymakers in Japan, Britain and Norway hold steady.

The Federal Reserve will lead the pack on Wednesday with markets pricing a 96% probability it will cut rates by 25 basis points to a new range of 4.25% to 4.50%.

More important will be any guidance on future easing, including the “dot plot” forecasts of Fed members for rates over the next couple of years.

Story Continues