StockTalk(7.5): China's struggle with economic recovery weighs down Asian markets
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Asian markets fell sharply on Jul 5 as China's economic data for June showed weakness, with concerns that the government can't introduce significant stimulus measures to boost growth. Investors are now waiting to release the Federal Reserve's meeting minutes and closely watched jobs data this week to gauge the world's top economy's health. Investors are concerned about Beijing's struggle to restore growth and the Fed's battle against inflation.
The stock market remains volatile due to concerns about Beijing's struggle to restore China's status as a critical driver of global GDP, coupled with a decline in its services sector and soft data on trade and consumer activity. The ongoing China-US relations issue is also causing investor worries, resulting in Hong Kong, Shanghai, Tokyo, Sydney, Seoul, Singapore, Taipei, Wellington, and Manila being in the red. Investors are closely monitoring global events that may impact future market sentiment.
Will China be able to introduce effective measures to jumpstart its economy, or will the lack of significant stimulus continue to weigh down market sentiment? How will ongoing China-US relations impact global markets in the long term?
What is your opinion on the impact of China's economic struggle and ongoing China-US relations on the stock market?
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IndependentLeague776 : I don't see China's economics as struggling. They are currently in the driver's seat. They are just waiting for everyone to get in the car. Problem is everyone wants to go in a different direction globally. Self interest are out weighing public interests. Greed always has a negative effect on all societies.
ZnWC : Data has shown weakness in China economy triggered by recession fear. Central Bank has decreased interest rate and introduced stimulus package to woo spending. On the other hand US, Japan and Europe economy is struggling with inflation and continue to raise interest rate (or threaten to raise rate) amid facing recession.
Hence Asian stock market is affected by weak global economy and US-China tension. The 2 sides fail to help each other and worse attack one another with tariffs, sanctions, anti-dumping law, trade restriction etc.
US former president Ronald Reagan once said that our differences worldwide would vanish if we were facing an universal threat from outside this world. Perhaps climate change may be this universal threat and I hope humanity 3000 years wisdom can help us get out of this crisis.
MonkeyGee ZnWC: you are so right. I think all this pain is self inflicted.
ZnWC MonkeyGee: I'm hope President Xi and President Biden have the wisdom and courage to set aside their national interests and focus on the universal threats - Global Stagnation and Climate Change.
MonkeyGee ZnWC: You would think that is the most logical thing to do. But I heard they were sending Yellen to China for trade talks. All she cares about is creating a another 2008.
ZnWC MonkeyGee: Talk is the first step to defuse tension. At least US and China is still talking to each other.
Cui Nyonya Kueh : Slowly but surely
MonkeyGee ZnWC: I think it's better they are not talking. Because what they are doing in these meetings is a power game and there is no intention of settling anything. So it just too risky to keep these big boys apart because they can behave.
ZnWC MonkeyGee: From the diplomatic point of view talk will diffuse any misunderstanding.
Kopikarp : We heard this week the decision by China to restrict exports of gallium and germanium, key components in the production of semiconductors, potentially impacts large chip manufacturers like Intel, AMD, and Nvidia, which could see disruptions to their supply chains.
While companies like Intel claim that their diverse global supply chain minimizes the risk to local changes and interruptions, the implications of these restrictions could be far-reaching. As these metals are crucial in the manufacture of semiconductors, a significant disruption in their supply could result in potential production bottlenecks and increased costs for these large tech companies.
In the short-term, this could result in a decrease in the stock prices for companies such as Intel, AMD, and Nvidia, as investors react to the potential increase in production costs and potential scarcity of these vital components. In the longer term, these companies may need to diversify their supply chains further, find new sources, or develop alternatives to these materials, which could lead to further changes in their stock values.
It's worth noting that geopolitical tensions, like the ongoing trade war between China and the US, can significantly impact global companies. Therefore, investors in companies like Intel, AMD, and Nvidia will need to closely monitor these developments, as they may influence the future performance of these stocks.
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