Markets are weighed down by disappointing Chinese data

Early European trade Monday saw the US dollar stable, just off a 20-year high, as traders sought this safe haven amid concerns about slowing global growth and mounting geopolitical tensions. As a result, European stock markets are expected to open lower on Monday, kicking off the week cautiously.

China data

After shockingly weak data from China exposed the deep damage lockdowns are causing to the world's second-largest economy, Asian stock markets tumbled on Monday, and oil prices fell after investors took profits following Friday's surge.

Due to the extended lockdowns engulfing Shanghai and other big cities to combat COVID-19, three important economic reports all failed to meet expectations in April.

April retail sales decreased by 11.1% compared to the same period last year, far below the 6.5% decline forecast, and they are down 0.2% year-on-year for the first four months of the year.

Furthermore, industrial production declined 2.9%, contrary to predictions that growth would slow only to 0.4%. Fixed-asset investment, however, remained positive, but it slowed to 6.8% from 9.3% to keep falling for the third month in a row.

A weaker growth trajectory in China will put further pressure on its markets and worsen global economic prospects, weighing on risk assets. The CNY is expected to depreciate further.

Events of the week

For the rest of the week, investors will closely watch the US retail sales and UK, EU and Canada inflation reports. In addition, they follow comments from Fed officials and ECB chairwoman Ms Lagarde. The Reserve Bank of Australia will release its meeting minutes on Tuesday.

US retail sales reports are due to be released on Tuesday. Core retail sales are expected to fall to 0.3% in April from 1.4% in March, while retail sales, including food and fuel prices, are expected to pick up by 0.1% to 0.8%.

On Wednesday, the UK will release inflation data that is expected to show consumer prices rose 9.1% on a year-over-year basis in April, marking the most significant annual increase since 1980 and the fastest rate since 1982.