While growth data in China remained below market expectations, the data put pressure on risk appetite in global markets.
After the disappointing growth data announced in China, Asian Stocks fell, led by Chinese equities. The MSCI Asia Pacific Index, which rose 4.4 percent last week, slumped.
The Chinese CSI 300 index is down 1 percent, while markets in Japan are closed for a public holiday. Futures indices in the US and Europe are also negative. The S&P 500 index rose 2.4 percent in the whole of last week.
While the gross domestic product in China grew below expectations in the second quarter of the year, worrying signals about consumer spending continued to come.
GDP growth was 6.3 percent year-on-year, below the Bloomberg survey estimate of 7.1 percent.
On a quarterly basis, the growth rate was announced as 0.8 percent, in line with the forecasts. Again, according to the data released this morning, industrial production in China exceeded expectations with 4.4 percent on an annual basis in June, while retail sales increased by 3.1 percent, below the forecasts.
Land investments in the country have also declined by 7.9 percent, above the 7.5 percent expectation since the beginning of the year. While the below-expected increase in retail sales pointed to the weakness of consumption expenditures, investment data on the housing sector rekindled the expectations for additional incentives.
Guotai Junan Hong Kong Ltd. “This is a consumption-driven slowdown that requires policy support on the demand side,” said Hao Zhou, chief economist. We believe that more interest rate cuts are more or less a guarantee.” On the other hand, the People’s Bank of China kept the one-year medium-term lending facility rate at 2.65 percent this morning after a 10 basis point cut last month.