Shares are coming under pressure again in the face of China concerns: the markets are collapsing

(Bloomberg) – Share prices fell on Tuesday as the rally in global equities lost momentum and investors worried about China's tepid recovery from the pandemic.

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European stock futures were lower, US contracts fell after Wall Street closed for a bank holiday on Monday and Hong Kong stocks led falls in Asia, with the Hang Seng China Enterprises Index falling more than 2%.

The broad negative moves pointed to further concerns about Chinese growth and the lack of fresh stimulus from Beijing. Chinese property companies were among the losers after disappointing with the extent of bank lending rate cuts. Tuesday's 10 basis point cut in the five-year interest rate was less than some forecasts.

“The market was hoping for a 15 basis point cut in the 5-year LPR to signal stronger housing market support,” said Redmond Wong, strategist at Saxo Capital Markets.

alibaba group holding ltd hovered about 1.5% down before Tuesday's trading after a surprise replacement of its chief executive and chief executive officer.

The yen weakened to 142 against the dollar as Japan's loose monetary policy weighs on the currency. The yuan depreciated slightly, so that the decline lasted for the third day.

The cost for banks to lend each other Hong Kong dollars for a month rose to its highest level since 2007. The move came after prolonged currency interventions eroded the city's liquidity pool and increased demand for cash.

The Australian dollar fell 0.7% after minutes following the central bank's latest decision – when interest rates were raised unexpectedly – showed the case for a move in both directions was well balanced.

The story goes on

Australian equities extended gains and short-term government bond yields reversed direction and fell after the central bank's minutes were released.

US Treasury yields rose after Monday's trading pause.

Meanwhile, as the direction of US Federal Reserve interest rates grows more uncertain, US traders are vacillating between the lure of the rally and concerns that it has exhausted and the market is overbought.

Looking ahead, Fed Chair Jerome Powell will present his mid-year report to Congress on Wednesday. James Bullard, President of the Federal Reserve Bank of St. Louis, and his counterparts in New York and Chicago are also among this week's speakers.

Fed policymakers left interest rates unchanged at their last meeting but cautioned against further monetary tightening. Last week's decision came with forecasts for higher borrowing costs of 5.6% in 2023, implying two more quarter-point rate hikes or one half-point hike before year-end.

Elsewhere, gold prices fell slightly, while oil prices fell as China's plans to shore up its economy were seen as insufficient to rekindle demand.

Important events this week:

• US housing construction begins on Tuesday

• James Bullard, President of the Federal Reserve Bank of St. Louis, speaks Tuesday

• New York Fed President John Williams speaks on Tuesday

• Federal Reserve Chairman Jerome Powell delivers his semi-annual testimony before Congress on Wednesday before the House Financial Services Committee

• Federal Reserve Bank of Chicago President Austan Goolsbee speaks Wednesday

• Eurozone Consumer Confidence, Thursday

• Collective bargaining decisions in the UK, Switzerland, Indonesia, Norway, Mexico, the Philippines and Turkey, Thursday

• US Conference Board leading index, Initial Jobless Claims, Current Account, Existing Home Sales, Thursday

• Federal Reserve Chairman Jerome Powell delivers his semi-annual testimony before Congress on Thursday before the Senate Banking Committee

• Loretta Mester of the Cleveland Fed speaks Thursday

• Eurozone S&P Global Eurozone Manufacturing PMI, S&P Global Eurozone Services PMI, Friday

• Japanese CPI, Friday

• US S&P Global Manufacturing PMI, Friday

• James Bullard, President of the Federal Reserve Bank of St. Louis, speaks Friday

Some of the key movements in the markets:

Shares

• S&P 500 futures were down 0.3% as of 7:01 a.m. London time

• Nasdaq 100 futures down 0.3%

• Japan's Topix fell 0.3%

• Australia's S&P/ASX 200 rose 0.9%

• Hong Kong's Hang Seng fell 1.7%

• The Shanghai Composite fell 0.2%

• Euro Stoxx 50 futures down 0.1%

currencies

• The Bloomberg Dollar Spot Index is little changed

• The euro was little changed at $1.0924

• The Japanese yen was little changed at 142.05 per dollar

• The offshore yuan fell 0.2% to 7.1808 per dollar

• The Australian dollar fell 0.7% to $0.6800

• The British pound was little changed at $1.2781

cryptocurrencies

• Bitcoin rose 0.4% to $26,823.53

• Ether fell 0.1% to $1,728.44

Bind

• The 10-year government bond yield rose three basis points to 3.79%

• Japan's 10-year yield was flat at 0.385%

• Australia's 10-year yield rose five basis points to 4.02%

raw materials

This story was created with the support of Bloomberg Automation.

– With support from Jason Scott, Richard Henderson and Charlotte Yang.

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