By Chibuike Oguh
New York (Reuters) – Global equities fell and the U.S. dollar rose on Monday after weaker-than-expected economic data in China prompted the country’s central bank to cut its lending rate, raising concerns of a global recession.
The People’s Bank of China unexpectedly cut key interest rates on Monday after the world’s second-largest economy reported July data on industrial output and retail sales that missed most analyst estimates.
China’s strict COVID-19 restrictions have hobbled activity at its main manufacturing hubs and popular tourist spots, including Shanghai, even as a deepening downturn continues in the property market.
“You’ve been seeing a slowing trend in China amplified by the lockdowns,” said Tom Plumb, portfolio manager at Plumb Balanced Fund in Wisconsin.
“The credit problems they’ve had especially with real estate developers, that’s going to tie their hands for how aggressive they can go back to stimulation. But I think it’s a sign they’re going to try to be more accommodative.”
The MSCI world equity index, which tracks shares in 50 countries, was down 0.16%. Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.34% lower.
The U.S. dollar strengthened following news of the Chinese central bank action amid disappointing data. The dollar index, which measures the greenback against six peers, rose 0.492%, with the euro down 0.64% to $1.0192.
On Wall Street, all major indexes were lower as traders took a pause following four straight weeks of gains and a likely moderation on U.S. Federal Reserve interest rate hikes after a slowdown in inflation.