By Gina Lee
Investing.com – Asia Pacific stocks were mostly down on Monday morning, as investors digested the latest, disappointing Chinese data.
China’s Shanghai Composite fell 0.57% by 10:52 PM ET (2:52 AM GMT) while the Shenzhen Component edged down 0.15%. Data released earlier in the day showed that fixed asset investment grew 6.8% year-on-year, industrial production contracted 2.9% year-on-year, Chinese industrial production grew 4% year-on-year, and retail sales contracted 11.1% year-on-year in April 2022. The Chinese unemployment rate stood at 6.1%.
Hong Kong’s Hang Seng Index was down 0.34%.
The People’s Bank of China moved to effectively cut the interest rate for new mortgages over the weekend, and the central bank will also release its loan prime rate on Friday. Although Shanghai is partially loosening its COVID-19 lockdown, some analysts expect a cut in the rate on one-year policy loans later in the day as the country’s measures to contain the latest COVID-19 outbreak continue to bite on the economy.
In the bond market, the key question is whether economic worries could help stem the U.S. Treasury selloff in 2022 to date. The benchmark 10-year U.S. yield climbed to 2.94%. Investors also remain concerned that high inflation and rising borrowing costs, alongside the war in Ukraine and the COVID-19 situation in China, could lead to a recession.
Despite the worries, some investors are hesitant of calling a bottom for equities despite a 17% drop in global shares in 2022. “There is a belief we could feasibly see a short-term calming before another leg lower with a greater degree of panic involved,” Pepperstone Group head of research Chris Weston said in a note.
However, Goldman Sachs Group Inc. (NYSE: GS ) Senior Chairman Lloyd Blankfein urged companies and consumers to brace for a U.S. recession, saying that the risk is “very, very high.” The firm’s economists now expect the economy to expand 2.4% in 2022 and 1.6% in 2023, down from the previous 2.6% and 2.2%.
The war in Ukraine, precipitated by Russia’s invasion on Feb. 24, continues and tensions remain high especially as Finland and Sweden moved toward joining the North Atlantic Treaty Organization.
“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," Citigroup Inc. senior investment specialist Mahjabeen Zaman told Bloomberg.
A slew of Fed policymakers will speak throughout the week, beginning with New York Fed President John Williams later in the day. Fed Chairman Jerome Powell and others will speak on Tuesday, followed by Philadelphia Fed President Patrick Harker a day later.
Elsewhere, the Reserve Bank of Australia will release the minutes from its May policy meeting on Tuesday, with G-7 finance ministers and central bankers meeting a day later.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.