Major stock markets largely climbed Monday tracking more weak data from China and hopes that the country had ended a long-running crackdown on the tech sector.
Chinese consumer inflation flattened last month and producer prices sank, indicating the world’s number two economy continuing to struggle.
“The dreaded fear of a deflationary spiral in China has reached ‘code red’,” said Kelvin Wong, analyst at OANDA trading group.
“Time is running out for Chinese policymakers to negate the steepening rout in the internal demand environment that can potentially lead to further loss in consumer and business confidence.”
Traders continued to react to tech-sector developments in China.
After a years-long probe Ant Group has been hit with a near $1-billion penalty for “illegal acts”, while Tenpay was ordered to pay more than $400 million.
Analysts said that while the figures were big, traders were cheered by the prospect that the firms could again concentrate on their business.
In a statement, the China Securities Regulatory Commission said “at present, most of the outstanding problems in the financial business of platform enterprises have been rectified”.
The news, announced Friday, sent the New York-listed shares of Alibaba and Tencent surging, and their Hong Kong stocks followed suit Monday.
“The market likes it because scrutiny looks likely to be over and the fine, though big in absolute terms, is very manageable for such a big company,” Vey-Sern Ling, at Union Bancaire Privee, said referring to Ant.
The surge in market heavyweight tech firms lifted the Hang Seng Index more than two percent at the open Monday, while there were also gains in Shanghai.
A mixed US jobs report left Wall Street’s three main indices lower Friday while the dollar climbed Monday.
Data showed fewer jobs were created last month than were forecast but wage growth remained strong, putting upward pressure on inflation.
The 209,000 reading for June was well down from May’s 306,000 but observers said it was still robust and would not likely deter the Federal Reserve from resuming its rate hike campaign this month.
“The US labour market is finally easing but not fast enough to stop the Federal Reserve resuming interest rate hikes in July,” said Mansoor Mohi-uddin at Bank of Singapore.
But he added that “slowing payrolls and easing inflation should let the Fed keep interest rates unchanged after July for the rest of 2023”.
Traders did take heart from a broadly positive visit to China by US Treasury Secretary Janet Yellen at the weekend, which she said helped put ties on “surer footing” after years of fraught relations.
Key figures around 1100 GMT
London – FTSE 100: UP 0.1 percent at 7,267.13 points
Frankfurt – DAX: UP 0.3 percent at 15,655.41
Paris – CAC 40: UP 0.4 percent at 7,142.30
EURO STOXX 50: UP 0.4 percent at 4,254.23
Tokyo – Nikkei 225: DOWN 0.6 percent at 32,189.73 (close)
Hong Kong – Hang Seng Index: UP 0.6 percent at 18,479.72 (close)
Shanghai – Composite: UP 0.2 percent at 3,203.70 (close)
New York – Dow: DOWN 0.6 percent at 33,734.88 (close)
Euro/dollar: DOWN at $1.0957 from $1.0970 on Friday
Pound/dollar: DOWN at $1.2797 from $1.2836
Dollar/yen: UP at 142.46 yen from 142.08 yen
Euro/pound: UP at 85.67 pence from 85.44 pence
West Texas Intermediate: DOWN 0.6 percent at $73.42 per barrel
Brent North Sea crude: DOWN 0.7 percent at $77.95 per barrel