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Stocks on Wall Street followed China lower on Tuesday after latest data from Beijing pointed to a continued slowdown in the world’s second-largest economy, raising concerns about global demand.
Wall Street’s benchmark S&P 500 fell 0.1% and the tech-heavy Nasdaq Composite fell 0.3% as U.S. markets reopened after the Labor Day holiday.
In China, the benchmark CSI 300 index fell 0.7% and Hong Kong’s Hang Seng lost 2.1%, erasing most of the gains both had made the previous day following news of new government support for the property sector.
Investors were again concerned about the health of the world’s second-largest economy after private survey data showed activity in the services sector fell in August to the lowest level since Chinese President Xi Jinping lifted strict coronavirus containment measures at the start of the year.
The Caixin services purchasing managers’ index hit an eight-month low of 51.8 last month, down from 54.1 in July and below the 53.6 forecast by economists polled by Reuters. The reading is near the neutral 50 mark that distinguishes expansion from contraction.
Shares in China’s troubled developer Country Garden fell 1%, recouping steeper losses earlier in the day after the company narrowly avoided a default by delaying a $2 bond payment during a grace period.
The developer, which some investors see as a gauge of the health of China’s once-dominant real estate sector, initially failed to make those payments in early August and was given a grace period that was due to expire this week .
The Hang Seng Mainland Property Index fell 2.8% on Tuesday, a day after Beijing vowed to step up support for the sector. The real estate sector has struggled with weak demand since China reopened after three years of a strict coronavirus lockdown.
Over the weekend, the government encouraged lenders to lower interest rates on existing mortgages and introduced policies allowing homebuyers in a dozen of China’s largest cities to reduce their down payments.
Eurozone economic data also failed to meet expectations, with the HCOB final composite purchasing managers’ index falling to 46.7 in August from 48.6 in July, the lowest level since November 2020. The reading was lower than an initial estimate of 47.
However, early losses in European stocks were offset by gains in the energy sector after Saudi Arabia announced it would extend oil supply cuts of 1 million barrels per day until the end of December.
International benchmark Brent crude rose 1.1% to $90 a barrel on the news, while U.S. benchmark West Texas Intermediate rose 1.7% to $86.91 a barrel.
The pan-European Stoxx Europe 600 stabilized from early losses to be flat in the afternoon, while France’s Cac 40 and Germany’s Dax both fell 0.1%. The Stoxx Europe 600 energy index rose 1.3%.
The S&P/ASX 200 fell 0.1% after the Reserve Bank of Australia kept interest rates steady, as expected, but noted that further tightening may be needed. The Australian dollar fell 1.3 percent against the greenback.
Investors turned their attention to U.S. factory orders data, which is expected to have fallen 2.5% in July after rising 2.3% last month, suggesting that high interest rates weighed on manufacturing activity.
