Shares dip as China growth disappoints

Danilo Masoni and Alun JohnReuters
China's central bank says the economy is "doing well" but faces challenges including default risks.
Camera IconChina's central bank says the economy is "doing well" but faces challenges including default risks. Credit: EPA

World shares have dipped after data showed slower-than-expected growth in China's economy last quarter and surging oil prices fed inflation concerns.

Calls by China's President Xi Jinping on Friday to make progress on a long-awaited property tax to help reduce wealth gaps also soured the mood.

An MSCI gauge of global stocks was down 0.1 per cent by 0808 GMT as losses in Asia and a weak open in Europe erased part of the gains seen last week on a strong start to the earnings season.

US stock futures were also lower with S&P 500 e-minis last down 0.2 per cent and Nasdaq e-minis down 0.3 per cent.

China's gross domestic product grew 4.9 per cent in the July-September quarter from a year earlier, its weakest pace since the third quarter of 2020. The world's second-largest economy is grappling with power shortages, supply bottlenecks, sporadic COVID-19 outbreaks and debt problems in its property sector.

Oil prices extended a recent rally amid a global energy shortage with US crude touching a seven-year high and Brent a three-year peak.

Europe's STOXX 600 equity benchmark index fell 0.4 per cent, dragged by luxury stocks, which are heavily exposed to China, and some poor earning updates.

Chinese blue chips fell 1.2 per cent and the Shanghai Composite Index lost 0.1 per cent.

"The Chinese economy grew slower in the third quarter, mainly because of policy challenges and high base effects from last year," said Iris Pang, economist at Dutch bank ING.

"We expect these two factors will continue to be in play for the fourth quarter, which means the slow growth of the Chinese economy will continue," she added.

Shane Oliver, chief economist at AMP, said investors also continued to worry about global inflation, which was being driven by the reopening of many economies after COVID-19 restrictions and supply chain issues.

On Monday, data showed New Zealand's consumer price index rose 2.2 per cent in the third quarter, its biggest rise in over a decade, causing the local dollar to jump as much as 0.5 per cent before changing course.

Some other currencies are also responding to rising inflation expectations, as investors increasingly bet central banks will have to raise rates.

The dollar rose 0.1 per cent against a basket of peers to 94.04, in sight of a one-year high hit last Monday, as traders position themselves for a looming tapering of the Federal Reserve's massive bond buying program.

Against a stronger dollar, sterling managed to steady after hawkish comments from Bank of England Governor Andrew Bailey over the weekend.

The yen meanwhile traded near its lowest in nearly three years against the dollar, as the Japanese central bank looked increasingly likely to trail behind other monetary authorities in terms of rate hikes.

On debt markets, global repricing of interest rate expectations pushed Euro zone bond yields back towards recent multi-month highs. Germany's 10-year Bund yields, the benchmark for the region, was up 3 basis points at -0.14 per cent.

High energy costs are driving some of the inflation fears and Brent crude was last up 0.5 per cent at $85.30 per barrel and US crude up 0.9 per cent to $83.02.

Gold fell 0.2 per cent at $1,763 an ounce, after falling 1.5 per cent on Friday as upbeat retail sales drove US bond yields higher.

Bitcoin rose 1 per cent to $62,168. It gained last week on hopes that US regulators would allow a cryptocurrency exchange-traded fund to trade.

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