Global Shares Trading Mixed Amid Worries About China Economy

Global shares were trading mixed Wednesday amid worries over discouraging data on China, as well as over the future of the US economy.
     
France's CAC 40 edged up 0.4% in early trading to 7,292.89, while Germany's DAX rose 0.2% to 15,799.93. Britain's FTSE 100 was little changed, inching down less than 0.1% to 7,387.74.
     
US shares were set to drift higher with Dow futures up 0.2% at 35,073.00. S&P 500 futures gained 0.2% to 4,463.00.
     
But benchmarks fell in Asia earlier in the day.
     
New Zealand's central bank left its benchmark interest rate unchanged at 5.5% on Wednesday. The Reserve Bank of New Zealand's monetary policy committee said the headline inflation rate had declined, but core inflation remained too high. The committee said it would take a prolonged period of subdued spending to reduce inflation pressure. The New Zealand dollar was little changed on the news, trading at around US $0.60.
     
“A recent set of disappointing economic data out of China has not been encouraging for the region," said Yeap Jun Rong, market analyst at IG.
     
Japan's benchmark Nikkei 225 dropped 1.5% to finish at 31,766.82. Australia's S&P/ASX 200 dove 1.5% to 7,195.20. South Korea's Kospi dipped 1.8% to 2,525.64. Hong Kong's Hang Seng slipped 1.4% to 18,329.30, and the Shanghai Composite lost 0.8% to 3,150.13.
     
Clifford Bennett, chief economist at ACY Securities, believes that strong US consumer spending could be momentary and run out of steam.
     
“This is perhaps largely due to the huge sale efforts that took place both online from Amazon and at major stores in general. It could be the case that all of that retail sales gain completely disappears in August. Remember, we did say this would be a strong result, but possibly the last of the good retail sales numbers for quite some time,” he said.
     
Coming into this year, the expectation was that China's economy would grow enough after the government removed anti-COVID restrictions to prop up a global economy weakened by high inflation. But China's recovery has faltered so much that it unexpectedly cut a key interest rate on Tuesday and skipped a report on how many of its younger workers are unemployed.
     
In the US, the economy has remained more resilient than expected despite higher interest rates. A report on Tuesday showed growth for sales at US retailers accelerated by more in July than economists expected.
     
The strong retail sales report raises hopes that the US economy can keep growing and avoid a long-predicted recession. But on the downside for markets, it could also raise the Federal Reserve's resolve to keep interest rates high in order to fully grind down inflation.
     
“Attention now turns towards the upcoming release of the FOMC Meeting Minutes. If the wording of the minutes hints at the FOMC needing to maintain interest rates at elevated levels for longer, this could further sour the mood in financial markets,” said Tim Waterer, chief market analyst at KCM Trade.
     
The Fed has already hiked its key interest rate to the highest level in more than two decades. High rates work by bluntly dragging on the entire economy and hurting prices for investments.
     
In energy trading, benchmark US crude rose 3 cents to $81.02 a barrel. The price for a barrel of US crude oil dropped $1.52 to $80.99 Tuesday. Brent crude, the international standard, added 4 cents to $84.93 a barrel.
     
In currency trading, the US dollar edged down to 145.52 Japanese yen from 145.57 yen. The euro cost $1.0925, up from $1.0904.