Global stocks fall as China's economic stimulus falters

Global equities started September on a down note after four months of gains, as China's efforts to boost its struggling economy showed little progress.

A gauge of Asian stocks fell, as did a global metric, marking the first day of trading in a typically volatile month for markets, News.Az reports citing foreign media.

Losses were led by Chinese stocks with New World Development Co. falling as much as 14% after the indebted property developer said it expected to post its first annual loss in two decades.

European index futures slipped, as did their US index counterparts. The dollar was steady, while purchasing managers’ surveys for Taiwan, Thailand and Indonesia all declined, weighing on their currencies. Cash Treasuries were closed for the US Labor Day holiday.

Global funds are positioning for major central banks, including the Federal Reserve, to reduce interest rates in September. At the same time, multiple rounds of stimulus have failed to revive growth in China, where a prolonged property market slump is curbing domestic demand in the world’s second-largest economy.

While the Caixin China manufacturing data registered an unexpected increase on Monday, it fell short of reversing sentiment after an official gauge of factory activity contracted for a fourth straight month in August. Latest home sales figures showed a worsening residential slump, after China Vanke Co. underlined the industry’s woes late Friday by reporting a half-year loss for the first time in more than two decades.

September is historically a volatile month for global markets. It’s been one of the worst months for stocks in the past four years, while the dollar typically outperforms, according to data compiled by Bloomberg. Wall Street’s fear gauge - the Cboe Volatility Index, or VIX - has risen each September the past three years, the data show.

This month may be no different with the crucial US jobs report on Friday serving as a guide to how quick, or slow, the Fed will cut rates, and as the US election campaign gets into full swing. Traders are pricing the Fed’s easing cycle will begin this month, with a roughly one-in-four chance of a 50 basis point cut, according to data compiled by Bloomberg.

News.Az