Global shares drop as China optimism fades; Aussie tumbles

Global equities fell on Tuesday as weak service sector data rekindled worries over China’s sputtering post-pandemic economy, while Australia’s central bank kept interest rates unchanged, pushing the Australian dollar lower.

European equity indexes opened in the red, with the pan-European benchmark STOXX 600 (.STOXX) dropping 0.8% and Germany’s DAX (.GDAXI), France’s CAC 40 (.FCHI) and Britain’s FTSE 100 (.FTSE) all nursing losses of between 0.6%-1.2%.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was 1.1% lower, moving away from a three-week high it touched on Monday.

That pushed MSCI’s gauge of stocks across the globe (.MIWD00000PUS) down 0.3%.

A recent rally in China shares, spurred by a spate of government measures to boost the faltering economy, is quickly losing steam. The blue-chip CSI 300 Index (.CSI300) fell 0.7%, while Hong Kong’s Hang Seng Index (.HSI) slid 2.1%, after those markets clocked their best day in over a month on Monday.

The optimism quickly dwindled after a private-sector survey showed on Tuesday that China’s services activity expanded at the slowest pace in eight months in August as weak demand continued to dog the world’s second-largest economy.

“The miss in China’s Caixin services PMI has offset some of the sentiment shift we got yesterday,” said Charu Chanana, market strategist at Saxo in Singapore.

Still, investors are hoping that Beijing’s drip feed of policy stimulus will be enough to stabilise the Chinese economy.

This report’s information was first seen on REUTERS; to read more, click this link.