China data prompts global growth concerns

LONDON — European markets were muted on Wednesday after weak Chinese economic data reignited worries that global growth is slowing.

The pan-European Stoxx 600 hovered fractionally below the flatline in early trade, with travel and leisure stocks sliding 1.1% to lead losses, while oil and gas stocks added 0.6%.

Shares in Asia-Pacific were mostly lower on Wednesday after data showed China’s retail sales growing at a much lower pace than expected in August. The retail sales print for the month grew 2.5%, against a 7% growth forecast by analysts polled by Reuters.

Stateside, stock futures were flat in early premarket trade after the Dow Jones Industrial Average plunged 290 points on Tuesday, as investor concerns about the state of the global economic recovery and the next move from the U.S. Federal Reserve.

Labor Department figures published Tuesday showed a smaller-than-expected rise in U.S. inflation for the month of August, stoking uncertainty over the recovery and the timing of the Fed’s tapering of asset purchases.

Elsewhere, the Institute of International Finance (IIF) revealed on Tuesday that global debt soared to a record $300 trillion in the second quarter. However, debt-to-GDP declined for the first time since the onset of the Covid-19 pandemic as growth recovered.

European investors also have on eye on the upcoming German federal election on September 26, with polls suggesting the race is still too close to call as voters try to decide a successor to Chancellor Angela Merkel.

European Commission President Ursula von der Leyen is scheduled to deliver the State of the Union address at 8 a.m. London time.

On the data front, U.K. inflation soared to a nine-year high in August, with consumer prices rising 3.2% year-on-year after a 2% annual rise in July, according to the Office for National Statistics. The 1.2 percentage point incline was the sharpest since records began in 1997.

“Following sharp spikes in inflation across the Atlantic in recent months, the UK economy has now come to the inflation party,” said Hugh Gimber, global market strategist at JPMorgan Asset Management.

“The doves among the members of the Bank of England’s Monetary Policy Committee will take some comfort in the large contribution from restaurant and hotel prices, given that much of this was driven by the heavy discounts offered under the Eat Out to Help Out Scheme last summer. That said, there are also signs that inflationary pressures are increasingly broad based across many sectors of the economy.”

Earnings came before the bell from H&M Group and Zara owner Inditex.

There was little by way of individual share price movement in early trade. Spanish swimming pool company Fluidra fell 3.9% after a share placement, while Swedish Match rose 2.2% after announcing plans to spin off its cigar business.

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