Global markets experienced a sell-off on Monday, with Asian stocks leading the decline, as investors grew apprehensive ahead of the Federal Reserve’s highly anticipated policy meeting and after China’s economic data and corporate updates fell short of expectations.
In China, the Shanghai Composite Index plummeted by 2.6%, its biggest single-day drop in over a month, as investors digested a slew of disappointing economic data and corporate updates. The country’s industrial output growth slowed to a six-month low, while retail sales and fixed-asset investment also missed forecasts.
Adding to the gloom, China Eastern Wastewater Treatment Co Ltd (CEWC), a leading environmental protection company, reported weaker-than-expected earnings, sparking a sell-off in the stock. CEWC’s shares tumbled by over 10%, leading a broader decline in the Chinese stock market.
The sell-off in China had a ripple effect on other Asian markets, with Japan’s Nikkei 225 Index falling by 1.3% and Hong Kong’s Hang Seng Index declining by 1.6%. South Korea’s Kospi Index also slipped by 1.4%.
The decline in Asian markets was mirrored in Europe, where major stock indices were trading lower. The Stoxx Europe 600 Index was down by 0.6%, while the German DAX Index fell by 0.8%.
The sell-off in global markets comes ahead of the Federal Reserve’s two-day policy meeting, which is expected to provide clues on the future direction of interest rates. Investors are bracing for a possible rate hike, which could have significant implications for global markets.
“Market participants are getting increasingly nervous ahead of the Fed meeting,” said a senior economist at a leading investment bank. “The uncertainty surrounding the policy decision is causing investors to take a risk-off approach, leading to a decline in stocks.”
The decline in global markets also comes amid growing concerns about the impact of the COVID-19 pandemic on the global economy. The World Health Organization warned on Monday that the pandemic is far from over, sparking fears of further lockdowns and economic disruptions.
In the currency markets, the US dollar strengthened against major currencies, while the Chinese yuan weakened. The yield on the 10-year US Treasury note edged higher, reflecting investor expectations of a possible rate hike by the Federal Reserve.
