US Futures, Oil Retreat After Big China Data Miss: Markets Wrap

(Bloomberg) — US equity futures fell and stocks wavered Monday as poor Chinese economic data fueled concerns about the global outlook.

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An Asia-Pacific share index came off sessions highs, the dollar firmed, Treasuries rose and oil slid, pointing to a fresh bout of investor caution.

The Chinese figures showed that industrial output and consumer spending slid to the worst levels since the pandemic began, hurt by Covid lockdowns.

Officials are taking measured steps to help the economy: China effectively cut the interest rate for new mortgages over the weekend to bolster an ailing housing market, but the one-year policy loan rate was left unchanged Monday.

In the bond market, the 10-year US yield dropped below 2.90%. A key question now is whether economic worries will help stem this year’s Treasury selloff, which has been driven by inflation and tightening US monetary settings.

Cryptocurrencies dipped as the mood in stocks weakened. That took Bitcoin back toward the $30,000 level.

The risk of an economic downturn amid price pressures and rising borrowing costs remains the major worry for markets. Many traders remain wary of calling a bottom for equities despite a 17% drop in global shares this year.

“The markets are being defined as volatile, fragile and to some extent unstable,” with bonds again looking like a haven asset adding to an “interesting mix,” Mahjabeen Zaman, Citigroup senior investment specialist, said on Bloomberg Television.

Goldman Sachs Group Inc. Senior Chairman Lloyd Blankfein urged companies and consumers to gird for a US recession, saying it’s a “very, very high risk.”

US Growth

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The firm’s economists cut their forecasts for US growth this year and next — they now expect the economy to expand 2.4% this year and 1.6% in 2023, down from 2.6% and 2.2% previously.

Food and fuel prices are feeding into rising costs. Wheat jumped by the exchange limit on India’s move to curb exports.

Oil was dented by the Chinese figures but remains in sight of $110 a barrel. Shanghai is close to the necessary threshold for loosening its six-week lockdown, a development that could spur bets on rising energy demand.

Traders are also waiting to see how European markets react to efforts by Finland and Sweden to join the North Atlantic Treaty Organization in the wake of Russia’s invasion of Ukraine. The shift in Europe’s security alliance could exacerbate tensions with Russia.

What to watch this week:

• New York Fed President John Williams speaks Monday

• Fed Chair Jerome Powell among slate of Fed speakers. Tuesday

• Reserve Bank of Australia releases minutes of its May policy meeting. Tuesday

• G-7 finance ministers and central bankers meeting. Wednesday

• Eurozone, UK CPI. Wednesday

• Philadelphia Fed President Patrick Harker speaks. Wednesday

• China loan prime rates. Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.7% as of 1:02 p.m. in Tokyo. The S&P 500 rose 2.4% Friday

• Nasdaq 100 futures fell 0.7%. The Nasdaq 100 rose 3.7% Friday

• Japan’s Topix index rose 0.1%

• Australia’s S&P/ASX 200 index rose 0.2%

• South Korea’s Kospi index fell 0.3%

• Hong Kong’s Hang Seng index shed 0.4%

• China’s Shanghai Composite index declined 0.5%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%

• The euro was at $1.0395, down 0.2%

• The Japanese yen was at 128.87 per dollar, up 0.3%

• The offshore yuan was at 6.8117 per dollar, down 0.2%

Bonds

Commodities

• West Texas Intermediate crude fell 1.4% to $108.94 a barrel

• Gold was at $1,810.12 an ounce, falling 0.1%

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