Oil prices tumble nearly 5% as China's economy stutters

London, United Kingdom: Oil prices slumped nearly five per cent Monday on data showing China’s economic recovery stuttering under COVID-19 restrictions and a slumping property sector. Stock markets mostly steadied and the dollar traded mixed as investors welcome signs of cooling US inflation, which nevertheless remains at the highest level in decades. “It’s been an underwhelming start to the week in financial markets with the eternal optimism of investors clashing with the reality of Chinese economic data,” noted Oanda senior market analyst Craig Erlam. China’s central bank slashed key interest rates in a surprise move Monday as a raft of data showed weakness in the world’s second-largest economy. The figures showed China’s industrial production and retail sales growth for July came in lower than expected. Industrial production was up 3.8 per cent year-on-year, but down from 3.9 per cent in June and well below analysts’ forecasts. “The risk of stagflation in the world economy is rising, and the foundation for domestic economic recovery is not yet solid,” China’s National Bureau of Statistics warned. Stagflation refers to long-running high inflation combined with rising unemployment and weak growth. Beijing’s rigid adherence to a zero-COVID strategy has held back economic recovery as snap lockdowns and long quarantines batter business activity and a recovery in consumption. July’s retail figures confirmed how fragile consumer confidence remains, said CMC Markets analyst Michael Hewson. “This weakness in the Chinese economy comes against the struggle to adapt to a zero-Covid policy, which the government shows little sign of relaxing, against a backdrop of rising cases,” Hewson said. “Problems in the property sector also aren’t helping, where many home buyers are halting mortgage payments in protest at delays to the completion of new homes.” Hong Kong ended down 0.7 per cent while Shanghai closed marginally lower. Tokyo was the standout in Asian trade, climbing 1.1 per cent, as GDP data showed the Japanese economy recovering after the government lifted Covid-19 curbs on businesses. European stocks were steady approaching the half-way stage, as investors await the release Wednesday of minutes from the Fed’s last policy meeting in July for clues to the US central bank’s interest rate plans. Slowing US inflation has prompted debate on whether the Fed may pivot more quickly from its recent posture of moving aggressively to hike borrowing costs. Markets are concerned that, after successive three-quarter point raises, further increases of a similar magnitude could choke off economic recovery. - Key figures at around 1100 GMT - Brent North Sea crude: DOWN 4.8 per cent at $93.46 per barrel West Texas Intermediate: DOWN 4.5 per cent at $87.99 per barrel London - FTSE 100: DOWN 0.1 per cent at 7,495.11 points Frankfurt - DAX: UP 0.1 per cent at 13,806.27 Paris - CAC 40: UP 0.2 per cent at 6,566.28 EURO STOXX 50: UP 0.2 per cent at 3,782.95 Tokyo - Nikkei 225: UP 1.1 per cent at 28,871.78 (close) Hong Kong - Hang Seng Index: DOWN 0.7 per cent at 20,040.86 (close) Shanghai - Composite: FLAT at 3,276.09 (close) New York - Dow: UP 0.1 per cent at 33,336.67 (close) Euro/dollar: DOWN at $1.0203 from $1.0261 Friday Pound/dollar: DOWN at $1.2079 from $1.2135 Euro/pound: DOWN at 84.46 pence from 84.53 pence Dollar/yen: DOWN at 133.35 from 133.50 yen Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.