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Title: Stocks struggle as China rate cut sends oil tumbling

August 15, 2022 12:26 AM ET

By: AnalysisWatch

Global stocks struggled to rally Monday as investors digested news of an unexpected cut in Chinese interest rates, while data pointed to faltering growth in the world's second-largest economy and oil prices slid nearly 2%.

Weaker U.S. stock index futures also weighed on sentiment, while a firmer dollar weighed on gold prices.

MSCI's all-country index was barely firmer after a one-month rise trimmed the benchmark's decline this year to about 13%.

China's central bank cut key interest rates to revive demand after the economy unexpectedly slowed in July and factory and retail activity came under pressure from Beijing's zero-interest-rate policy and a property crisis. So far, investors have been concerned with the extent to which central banks in the United States and Europe will continue to raise interest rates when they meet next month.

Hopes for lower rate hikes on signs that U.S. inflation may have peaked helped Wall Street to its fourth straight week of gains on Friday.

The gains on Wall Street and stable growth figures for Japan helped the Nikkei stock index in Tokyo reach its highest level in more than seven months.

"China is in a different situation than the rest of the world," he said. "They have a self-imposed recession caused by zero interest rate policies," said Patrick Armstrong, chief investment officer at investment house Plurimi Group.

Results from major retailers, including Walmart and Target, will be watched for signs of slowing consumer demand.

The cut in Chinese interest rates failed to prevent Chinese blue chips from falling 0.13%, while the yuan and bond yields also slipped.

Geopolitical risks remain high as a delegation of U.S. lawmakers leaves for a two-day trip to Taiwan.

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