US stocks were subdued on Tuesday and oil prices fell after a fresh burst of disappointing economic data from the US and Germany added to concerns over the global growth outlook.
Wall Street’s broad S&P 500 was up 0.1 per cent by the late morning in New York, while the technology-heavy Nasdaq Composite was down 0.3 per cent. Europe’s regional Stoxx 600 share index closed 0.2 per cent higher. Germany’s Dax rose 0.7 per cent and London’s FTSE 100 added 0.4 per cent.
Those moves came after data showed that the rate of new home construction in the world’s largest economy fell to its lowest level in July since early 2021. US housing starts last month fell 9.6 per cent month on month to an annualised pace of just under 1.45mn, lower than Wall Street forecasts of about 1.54mn and below June’s figure of 1.6mn.
“Homebuilders now have far too much inventory, and prices are under pressure,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics. “They also face increasing competition from private sellers of existing homes, who are now starting to flood the market after a year on the sidelines, watching prices rise rapidly.”
Earlier on Tuesday, fresh survey results had cast a pall over the outlook for Germany. Figures from economic research group Zew showed that investment professionals’ confidence in the eurozone’s largest economy had deteriorated again in August. A reading of minus 55.3 for August was worse than the previous month’s figure and a consensus forecast of minus 53.8.
Central banks have in recent months indicated that monetary policy tightening strategies will be guided in part by signals given by economic data releases.
This has made market watchers pay more attention to individual data points than they have previously, said Altaf Kassam, Emea head of investment strategy and research at State Street Global Advisors.
“It’s going to increase volatility, and the worry is that will be magnified by lower liquidity in the summer,” he said. “Every data point is going to be scrutinised, which can lead to greater day-to-day volatility.”
The muted performance in US equity markets came despite Walmart, the world’s largest bricks-and-mortar retailer, reporting stronger than feared quarterly figures and raising its full-year guidance. The company, widely perceived as a barometer for the health of the US consumer, had in late July issued its second profit warning in 10 weeks.
Shares in Walmart added more than 6 per cent after it forecast a smaller decline in full-year earnings than it had previously indicated. In May, the group’s shares endured their biggest one-day drop since 1987 after it cut guidance.
Meanwhile, Brent crude fell 2.2 per cent to $93.06 a barrel, extending declines from the previous session in the latest sign of recession fears stalking markets. US marker West Texas Intermediate dropped 2.6 per cent on Tuesday to $87.13 a barrel, after sliding on Monday to its weakest level since early February, before Russia’s full-scale invasion of Ukraine.
In Asian equity markets, Hong Kong’s Hang Seng index closed down 1.1 per cent, pulled lower by a drop in the shares of food delivery group Meituan after Reuters reported that tech group Tencent planned to sell all or a bulk of its 17 per cent stake in the business.
That decline came despite a sharp rise in the shares of Chinese property companies, on the back of reports that Beijing may order state-run groups to guarantee some developer bonds issued in the country’s onshore market.
US government bonds came under pressure on Tuesday, with the yield on the benchmark 10-year Treasury note rising 0.04 percentage points to 2.83 per cent as its price fell. The yield on the equivalent German Bund rose 0.08 percentage point to 0.98 per cent.