Producers of metals and other raw materials experienced a decline in response to weak inflation data in China, indicating an increasing risk of deflation in the country.
China’s Economic Struggles
According to Edward Moya, a senior market analyst at foreign-exchange brokerage Oanda Group, China continues to weigh on the global economy. Moya suggests that the situation in China has become increasingly dire, leading officials to scramble for additional support for real estate developers.
Stock Rally Halted
One money manager attributes the stalled stock rally to indications of wage inflation in employment data. Furthermore, signals from the Federal Reserve suggesting more rate hikes are imminent contribute to the market slowdown. While the need for further rate hikes is questioned based on progress made in unwinding Covid-induced inflation, Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management, believes that the Fed will persist with rate hikes until there are sustained and undeniable signs of weakening employment.
It is evident that China’s struggles and the potential impacts on inflation and employment are causing uncertainty in the market.
- Rob Curran