European shares lower in Asia on weak Chinese economic data

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European shares declined on Monday, followed by Asia, as weak Chinese economic data reinforced investor concerns that the world’s second-largest economy was struggling to bounce back after three years of severe pandemic restrictions.

Europe’s sectoral Stoxx 600 was down 0.5 per cent at the opening bell, extending losses from the previous session, as heavy losses in consumer cyclicals and energy companies dragged the index down.

France’s CAC 40 fell 0.8 percent, Germany’s DAX fell 0.4 percent and London’s energy-heavy FTSE 100 fell 0.3 percent.

The decline was also echoed in Asian markets, where China’s benchmark CSI 300 index slipped 0.8 per cent on Monday as official data showed the country’s second-quarter growth slowed significantly from the previous three-month period.

China’s gross domestic product grew 0.8 percent in the three months to July, down from 2.2 percent in the previous quarter, as a slump in exports, weak retail sales and a dying property sector weighed on growth.

“China’s revival is losing momentum after an early release of pent-up demand during the zero-Covid policy era, while exports are falling amid a slump in global demand,” said Duncan Wrigley, chief China economist at Pantheon Macroeconomics.

The disappointing data weighed on oil prices, with international benchmark Brent crude trading 1.2 per cent lower at $78.93 a barrel, while US marker West Texas Intermediate fell by a similar margin to $74.52. China is the second largest oil consumer in the world after the US.

Investors’ attention will be focused on an upcoming meeting of China’s ruling Politburo later this month, where policymakers are expected to consider possible support for the economy.

Elsewhere in Asia, South Korea’s Kospi slipped 0.4 per cent, while Hong Kong’s stock exchange suspended trading due to weather warnings and Japanese markets were closed for a holiday.

Meanwhile, traders got ready for the Federal Reserve Bank of New York’s release of its Empire State Manufacturing Survey later in the day, with the index expected to come in at minus 4.3 in July, down from 6.6 in the previous month.

The negative reading means most survey respondents reported an overall contraction in factory activity, as the sector faltered after a prolonged US interest rate hike.

US futures were mixed, with contracts tracking Wall Street’s benchmark S&P 500 shedding 0.1 percent, while contracts tracking the tech-heavy Nasdaq 100 added 0.1 percent ahead of the New York open.

With earnings season well underway, traders turned their attention to tech companies this week; Electric-car maker Tesla is the first giant in the sector to report results on Wednesday.