European stocks gain, bonds struggle ahead of this week's crucial U.S. data

Asia Markets Falter on Weak China Manufacturing

Global stock markets started September under pressure, as disappointing manufacturing data from China weighed on investor sentiment. Major Asian indices lost ground after China’s factory activity unexpectedly shrank in August, rekindling concerns about the strength of the world’s second-largest economy.

Key Points from the Report

  • China’s Caixin/S&P Global manufacturing PMI fell to 49.7 in August, signaling contraction and surprising economists who had expected a reading of 51.0.
  • Mainland Chinese shares lost nearly 0.6%, while Hong Kong’s Hang Seng Index dropped 1.2% to a six-week low.
  • Japanese stocks were also dragged down, with the Nikkei 225 falling 0.7%.

Investors Turn Defensive

The weak China data soured risk appetite globally, pushing investors toward safe-haven assets. In currency markets, the U.S. dollar continued its advance, hovering near a seven-week high against its global peers.

Other Market Movements:

  • MSCI’s broadest index of Asia-Pacific shares outside Japan declined 0.8% in early trade.
  • The U.S. dollar index was steady at 104.7, close to its highest level since mid-July.
  • Yields on U.S. Treasury bonds rose slightly, reflecting investor uncertainty about growth prospects.
  • European futures pointed to a lower open as traders brace for more economic data releases.

China’s Economic Recovery Remains Uneven

Analysts caution that the latest figures underscore persistent challenges facing China’s post-pandemic recovery. Despite stimulus efforts such as interest rate cuts, weak demand continues to dog the manufacturing sector.

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