UK market anxiety over fiscal policy also continued, with sterling falling and UK government bond yields climbing after ratings agency Fitch lowered the outlook for its credit rating for British government debt to “negative” from “stable” on Wednesday, days after a similar move from rival Standard & Poor’s.
As still-positive U.S. economic surprises indexes ebb and deeply negative euro zone equivalents improve somewhat, the surprise gap between the two blocs has fallen to its lowest since May.
But nervousness about China’s economy and the alarming underperformance of Chinese stock benchmarks – now running at 21% year-to-date against MSCI’s all-country indexes – continued to jar.
Profit growth at China’s industrial firms slowed again last month, with year-on-year gains of just 2.7% missing forecasts and suggesting more policy support measures are needed to help shore the world’s second-largest economy.
Property developers plunged 2.3%, failing to sustain recent gains on hopes of government support.
Beijing police, meantime, are investigating suspected crimes committed by Zhongzhi Enterprise Group, a leading Chinese wealth manager, according to a social media post published by the Chaoyang Public Security Bureau on Saturday.
And there was also some alarm at health developments and rising respiratory illnesses, despite official assurances. A spike in such illnesses is due to peak in the coming weeks but is not as high as before the COVID-19 pandemic, a World Health Organisation official said, reiterating that no new or unusual pathogens had been found in the recent cases.
But not all was in the red, even if for worrying reasons. Small cap Chinese stocks rose after the Beijing Stock Exchange de facto implemented a new policy that prevents major shareholders of companies listed on its bourse from selling stock, three sources told Reuters.
Shares of Beijing Stock Exchange jumped 11% following a record 21% gain last week.
