A touch of caution was evident in financial markets as Chinese economic data provided few positives for investors ahead of the third and final U.S. presidential debate.
The MSCI All Country World Index of shares was little changed after rallying in the last session by the most in almost a month. Hong Kong stocks swung to a loss, while Chinese equities and the Australian dollar erased gains after an unexpected slowdown in China’s industrial output cast a cloud over gross domestic product figures that matched estimates. A gauge of the greenback’s strength held near a one-week low following U.S. inflation data that damped expectations for interest-rate hikes. Crude oil rose after data showed American supplies fell, while aluminium dropped.
"China won’t do anything new in terms of policy because the economy isn’t sliding," said Ben Kwong, a Hong Kong-based director at KGI Asia Ltd. "Under these conditions, the market doesn’t really have a direction. It needs to wait for news on U.S. rates."
China is the world’s biggest driver of global growth and signs of stabilization in its economy after five years of slowing expansion have provided some comfort to investors as the Federal Reserve weighs the case for its first interest-rate hike since December. Wednesday’s U.S. presidential debate comes as opinion polls point to a growing likelihood that Democratic nominee Hillary Clinton will beat Republican rival Donald Trump in next month’s vote.
The Stoxx Europe 600 Index was down 0.2% as of 8:16 a.m. London time, after surging 1.5% on Tuesday. ASML Holding NV jumped by the most in eight months after Europe’s largest semiconductor-equipment maker forecast profitability above analysts’ estimates for the final three months of the year.
The MSCI Asia Pacific Index added 0.3%, having been up 0.4% prior to the China data. The Hang Seng Index declined 0.5% and the Shanghai Composite Index was little changed.
China’s gross domestic product expanded 6.7% in the last quarter from a year earlier, the third straight period at that pace. Industrial output rose 6.1%, less than the median forecast for a 6.4% gain.
Sharp Corp. surged 11% in Tokyo after Nikkei reported that the company expects to achieve an annual operating profit for the first time in three years. Betting company Tatts Group Ltd. jumped 16% in Sydney after agreeing to be bought by Tabcorp Holdings Ltd. in a deal valued at A$6.4 billion ($4.9 billion). Tabcorp rose 3.5%.
Futures on the S&P 500 Index slipped 0.2%, after the underlying gauge added 0.6% on Tuesday. While only 57 of the benchmark’s members have reported results so far, about 80% announced earnings that exceeded analysts’ estimates, according to data compiled by Bloomberg.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was little changed after losing 0.5% over the last two days. The measure advanced over the last two weeks as speculation the Fed was getting closer to a rate hike prompted hedge funds and money managers to boost bullish bets on the greenback.
The pound weakened 0.2% versus the dollar. The U.K.’s departure from the European Union could lead to a 4.5% drop in gross domestic product by 2030, the Guardian newspaper reported, citing an average of estimates that was included in a paper circulated at a Brexit cabinet committee meeting.
Australia’s dollar was steady, after earlier strengthening as much as 0.3%. New Zealand’s currency was up 0.1%, having recorded a gain of 0.6% in the run-up to the Chinese data. Both countries count China as their biggest export market.
“If the Aussie and Kiwi are looking for fresh fuel, they didn’t find it in the China data,” said Sean Callow, a senior strategist at Westpac Banking Corp. in Sydney.
West Texas Intermediate crude climbed 1.1% to $50.83 a barrel in New York. US oil stockpiles dropped by 3.8 million barrels last week, the American Petroleum Institute was said to have reported. Analysts surveyed by Bloomberg forecast official data on Wednesday would show an increase in supplies. Oil has risen about 14% since OPEC reached a deal to manage supply last month.
Aluminium declined 0.7%, after earlier rallying as much as 0.8%. China, which accounts for more than half of world output, reported Wednesday that its production surged to a 15-month high in September as new and idled plants were fired up.
“The smelters are coming back in a rush now, so that’s a concern,” said Paul Adkins, managing director of aluminium consultancy AZ China Ltd. “For the rest of this year, two million tons of annual capacity is guaranteed to come in and guaranteed not to exit.” That’s “going to put a lot of pressure on prices when we get to November or December onwards,” he said.
Rubber futures in Japan fell 3.4%, the most in a month. Global production is increasing and China’s economic data also weighed on sentiment, according to Gu Jiong, an analyst at Yutaka Shoji, a commodity broker in Tokyo.
The yield on US Treasuries due in a decade was little changed at 1.74%. It fell three basis points on Tuesday as core inflation, which excludes energy and food costs, came in weaker than economists estimated. The probability of the Fed hiking interest rates this year slipped by three percentage points in the last session to 63%, futures prices indicate.
Australia’s 10-year bonds gained for the first time in four days, pushing their yield four basis points lower to 2.30%. The rate on similar-maturity U.K. notes increased by two basis points to 1.10%.