Global shares slip as investors fret over Chinese economy, Afghanistan turmoil

WASHINGTON/LONDON (Reuters) -A surprisingly sharp slowdown in Chinese economic activity and a rapid Taliban takeover in Afghanistan helped drive global shares lower Monday.

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All three major U.S. indices opened Monday sharply lower, after posting fresh record highs last week. The Dow Jones Industrial Average fell 134.63 points, or 0.38%, in early trading, while the S&P 500 lost 0.30% and the Nasdaq Composite dropped 0.32%. [.N]

The disappointing data out of China also ended a 10-day run of gains for European stocks, with commodity-linked stocks – which are sensitive to demand from China – falling the most. [.EU] The pan-European STOXX 600 index was down 0.5% past midday in London, easing from record levels last week.

The MSCI world equity index, which tracks shares in 45 nations, was down 0.57%.

Meanwhile, U.S. Treasury yields slipped as demand for less risky U.S. bonds ticked up. Benchmark 10-year yields US10YT=RR fell to 1.235%. The yield curve between two-year and 10-year notes US2US10=TWEB flattened 4 basis points to 103 bps.

Figures on July retail sales, industrial production and urban investment in China all missed forecasts, a trend that is only likely to get worse given the recent tightening in coronavirus restrictions there. [L1N2PN03I]

“The July data has been adversely affected by the massive flooding in China over that period, plus the movement restrictions internally and at key export ports, to curb the stubborn appearance of the Delta variant, albeit in small numbers,” said Jeffrey Halley, senior market analyst at OANDA.

“The latter is weighing on investors’ nerves now, especially when one looks at the evolution of outbreaks in the region from Australia to Singapore to Japan and everywhere in between. If anyone can break the trend, it is China.”

Further adding to dour investor sentiment was the sudden collapse of the Afghan government and what it may mean for political stability in the region.

That overall risk off mood also helped boost the dollar, sending it back to 92.589, up 0.1% on the day against a basket of currencies.

Investors this week will also be looking for fresh indications from the U.S. Federal Reserve as to when the central bank might consider easing off on its massive stimulus. Minutes from the Fed’s last policy meeting are due out on Wednesday, while Fed chair Jerome Powell is speaking Tuesday.

In commodity markets, gold ticked up to $1,784, shaking off losses posted last week. U.S. gold futures were up 0.46% at $1,786.40. [GOL/]

Oil prices slid on concerns coronavirus travel restrictions would hurt demand, particularly in China. [O/R]

Brent crude was last down 2.89% at $68.58 per barrel, while U.S. crude was last down 3.29%.

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