Global stocks falter on weak China, Europe data; Aussie tumbles -Today at 08:02 am| MarketScreener

LONDON, Sept 5 (Reuters) – Global equities were lower on
Tuesday as weak service sector data from China and Europe
rekindled worries over the global economy, while Australia’s
central bank kept interest rates unchanged, pushing the
Australian dollar lower.

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.

Data from the euro area and Britain also showed a decline in
business activity in August, with the dominant services industry
in both regions falling into contraction.

European equity indexes were mixed, with the pan-European
benchmark STOXX 600 little changed.

Germany’s DAX and France’s CAC 40 were down
0.1% and 0.2%, respectively, while Britain’s FTSE 100
eked out a 0.1% gain.

This followed a weak performance in Asia, where MSCI’s
broadest index of Asia-Pacific shares outside Japan
fell 1.1%, moving away from a three-week high it
touched on Monday.

That saw MSCI’s gauge of stocks across the globe
down 0.2%, while futures on Wall Street
were signalling a negative open.

“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.

“It feels like China has been tinkering around the edges and
they probably need to do something more substantial,” said Dan
Boardman-Weston, CEO and CIO at BRI Wealth Management.

“They clearly want to sort out the property sector and make
sure moral hazard doesn’t encroach into the system, but I have
been surprised by how seemingly weak the policy easing has been
thus far.”

The disappointing global data gave the U.S. dollar a lift,
while its Australian counterpart shed over 1.5%,
dropping to its lowest level since November at $0.6364 after the
country’s central bank held rates at 4.10% and said recent data
were consistent with inflation returning to the 2% to 3% target
range in late 2025.

“The key final paragraph was essentially unchanged, with a
hawkish bias intact, but clearly no desire to act upon this bias
unless forced by the data to do so,” RBC capital markets chief
economist Su-Lin Ong said in a note.

The Aussie also functions as a liquid proxy for the yuan
, owing to the country’s exports to China.

Meanwhile, the euro dropped 0.6% to $1.0729, a
three-month low, and the Japanese yen weakened 0.5% to 147.33
per dollar, at levels that led to intervention from Japanese
authorities last year.

This pushed the dollar index, which measures the U.S.
currency against six rivals, to its highest since March at
104.75.

U.S. markets were closed on Monday for a holiday, leading to
light trading volumes. While the economic calendar in the region
is bare, several Federal Reserve officials are due to speak
during the week.

Data on Friday showed U.S. job growth picked up in August,
but the unemployment rate jumped to 3.8%, while wage gains
moderated. The slight cracks in the labour market bolstered
expectations that the Fed is likely done hiking rates.

Markets are pricing in a 93% chance of the Fed keeping rates
unchanged later this month, according to LSEG data.

Markets are also now leaning against a hike at the European
Central Bank’s September meeting after a run of soft data.

In commodities, U.S. crude fell 0.3% to $85.27 per
barrel and Brent was at $88.36, down 0.7% on the day,
although both remain in close proximity to year-to-date highs.

“It’ll be interesting to see how rising oil prices start to
shape the inflation narrative again,” BRI’s Boardman-Weston
said.

“If inflation starts accelerating again, the Fed might need
to go higher than we thought,” Boardman-Weston added.

(Reporting by Samuel Indyk and Ankur Banerjee; Editing by
Stephen Coates, Kim Coghill, Christina Fincher and Shounak
Dasgupta)