European shares open lower on China growth fears

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European shares tumbled in Asia on Wednesday after fresh data from China underscored the challenges facing the world’s second-largest economy as it weakened its recovery from the pandemic.

Europe’s region-wide Stoxx 600 fell 0.4 percent at the opening bell, led by real estate shares, while France’s CAC 40 fell 0.3 percent and Germany’s DAX 0.7 percent.

The decline was also echoed in Asian markets, where investors turned cautious after data showed China’s services sector activity grew slower than expected in June, indicating the economy was beginning to recover from three years of severe COVID-19 restrictions. fighting for.

The closely watched Caixin Services Purchasing Managers’ Index came in at 53.9 on Wednesday, down from May’s 57.1 and below the consensus estimate of 56.2. A reading above 50 indicates an expansion in activity.

“The services sector recovery appears to be slowing after an initial strong spurt of growth soon after China rolled back the zero-covid policy,” said Duncan Wrigley, chief China economist at Pantheon Macroeconomics.

“It warrants a measured easing approach but not a massive stimulus. Limited fiscal, quasi-fiscal and targeted monetary policy measures are likely to follow,” he said.

The People’s Bank of China last month cut its benchmark lending rates for the first time in nearly a year, as policymakers extended cautious monetary support in an effort to spur more robust growth.

China’s CSI 300 fell 0.8 percent and Hong Kong’s Hang Seng index fell 1.4 percent after the data was released. The topics of Japan were flat.

Meanwhile, contracts tracking Wall Street’s benchmark S&P 500 declined 0.2 percent, and those tracking the tech-focused Nasdaq 100 shed 0.4 percent as traders closed U.S. markets after the Independence Day holiday. were ready to reopen.

Investors were awaiting the minutes of the Federal Open Market Committee’s June meeting, to be released later on Wednesday, for more details on the US central bank’s outlook on interest rates.

Oil prices were mixed after a steady rise in the previous session, spurred by the announcement that Saudi Arabia and Russia, the world’s two top producers, planned to cut supply in August.

International benchmark Brent crude pared some gains and fell 0.4 per cent to $75.94 a barrel. However, West Texas Intermediate, which is based on US oil prices, rose 1.8 percent to $71.05.