Global markets mostly drop as China rate cut underwhelms / Photo: GREG BAKER - AFP/File
Global markets mostly drop as China rate cut underwhelms
Asian and European stocks mostly fell Tuesday, as China's smaller-than-forecast interest rate cut failed to dispel worries over its flagging powerhouse economy.
Sentiment was also subdued before the return of Wall Street traders from a long holiday weekend.
London stocks firmed on the eve of critical UK inflation data and ahead of Thursday's expected interest rate increase from the Bank of England.
Frankfurt and Paris slid one week after the European Central Bank also lifted rates but the US Federal Reserve hit pause, while both flagged more hikes.
World oil prices meanwhile advanced and the dollar wavered against rival currencies.
- 'Headwinds for global economy' -
"Developments in China, where the central bank cut its reference interest rate by ten basis points, continue to point to a slower-than-predicted post-pandemic recovery in the world's second-largest economy," said ActivTrades analyst Ricardo Evangelista.
"With China's economy struggling to regain momentum, the headwinds for the global economy get stronger," he warned.
The People's Bank of China reduced its benchmark five-year rate by 10 basis points, less than the 15 points expected, though it did meet forecasts for a 15-point reduction in the one-year rate.
Traders were left disappointed by Beijing's lack of action to kickstart the country's lumbering economic recovery.
The move came after the PBoC had last week lowered two other key rates and pumped billions into financial markets.
In reaction Hong Kong stocks dropped more than one percent, with tech firms -- which are susceptible to higher borrowing costs -- taking the brunt of the selling, while property companies also dropped.
Shanghai was also in negative territory, but Tokyo eked out gains.
Tuesday's retreat extended this week's losses that were fuelled by frustration at the lack of detail from China on measures to boost the economy, which has failed to recover since painful zero-Covid measures were removed at the end of 2022.
There had been hope they would unveil help for the troubled property sector -- a crucial growth driver-- as well as consumer activity and youth unemployment.
China's decision to reduce rates contrasts with Western countries, which have been forced into a series of interest rate hikes while reducing money supply to tame rampant inflation.
In company news, Alibaba said it will replace its top boss in a surprise move at the e-commerce titan as it looks to recover from years of slow growth.
Chairman and CEO Daniel Zhang will be replaced by Joseph Tsai as chairman and Eddie Wu as CEO from September 10.
- Key figures around 1100 GMT -
London - FTSE 100: UP 0.1 percent at 7,593.95 points
Frankfurt - DAX: DOWN 0.5 percent at 16,124.66
Paris - CAC 40: DOWN 0.2 percent at 7,300.85
EURO STOXX 50: DOWN 0.3 percent at 4,351.26
Tokyo - Nikkei 225: UP 0.1 percent at 33,388.91 (close)
Hong Kong - Hang Seng Index: DOWN 1.5 percent at 19,607.08 (close)
Shanghai - Composite: DOWN 0.5 percent at 3,240.36 (close)
New York - Dow: Closed for public holiday
Euro/dollar: UP at $1.0931 from $1.0921 on Monday
Pound/dollar: DOWN at $1.2763 from $1.2792
Dollar/yen: DOWN at 141.44 yen from 141.98 yen
Euro/pound: UP at 85.66 pence from 85.38 pence
Brent North Sea crude: UP 0.8 percent at $76.70 per barrel
West Texas Intermediate: UP 0.4 percent at $72.09 per barrel
burs-rfj/bcp/rl
R.Gutierrez--RTC
