Asian stocks mixed after China reports weak July data and cuts key interest rate

BEIJING (AP) — Asian stock markets were mixed Tuesday after China reported weak July consumer and business activity and its central bank cut a key interest rate to shore up the struggling economy.

Shanghai and Hong retreated while Tokyo and Sydney gained. Oil prices rose.

The Shanghai Composite Index fell 0.3% to 3,169.18 after official data showed growth in Chinese consumer spending and factory output slowed more than expected. The People’s Bank of China cut its interest rate on one-week loans to banks. The Hang Seng in Hong Kong lost 0.8% to 18,622.55.

“Policymakers are starting to hit the panic button,” said Stephen Innes of SPI Asset Management in a report.

The Nikkei 225 in Tokyo gained 0.8% to 32,314.90 and Sydney’s S&P-ASX 200 rose 0.5% to 7,310.30.

Markets in Korea and India were closed for holidays. New Zealand, Singapore and Jakarta gained while Bangkok declined.

Chinese leaders are trying to shore up flagging economic growth without resorting to an across-the-board stimulus they worry will push up debt they think is already dangerously high. Growth slid to 0.8% over the previous quarter in the three months ending in June from the January-March period’s 2.2%.

Growth in retail sales declined to 2.5% over a year earlier in July from the previous month’s already low 3.1%, official data showed Tuesday. Growth in factory output and investment also decelerated despite promises by the ruling Communist Party to support entrepreneurs.

On Wall Street, the benchmark S&P 500 index gained 0.6% to 4,489.72 on Monday ahead of an update on U.S. retail spending that traders hope will help to avert a possible recession.

The Dow Jones Industrial Average edged up 0.1% to 35,307.63. The Nasdaq composite gained 1.1% to 13,788.33.

U.S. Steel jumped 36.8% and the steelmaker said it rejected a buyout offer from Cleveland-Cliffs and that it has received others. Cleveland-Cliffs rose 8.8% after it said it offered more than $7 billion and was ready to move on a deal immediately.

Nikola sank 6.7%. The zero-emission truck company recalled more than 200 of its electric vehicles after an investigation indicated a problem with a component in the battery pack could be the cause of an earlier fire. It earlier suggested foul play could be at play in the truck fire at its headquarters.

The S&P 500 has retrenched by 2.2% in August after soaring 19.5% through the first seven months of the year.

Critics say Wall Street too quickly latched onto the belief that inflation was under control and the economy could avoid a recession.

Consumer inflation edged up to 3.2% in July from the previous month’s 3%. That is down from last year’s peak above 9% but still higher than the Federal Reserve’s 2% target.

On Tuesday, the U.S. government will report monthly retail sales. Economists say it is one of the week’s most important reports. They expect it to show growth accelerated to 0.4% in July from 0.2% in June.

On Wednesday, the Fed releases minutes of its latest board meeting. At that meeting, the U.S. central bank’s main interest rate was raised to the highest level in more than two decades.

Traders broadly expect the Fed to hold rates steady at its next meeting in a little more than a month, according to data from CME Group. They also have some bets saying the Fed will begin cutting rates early next year.

In energy markets, benchmark U.S. crude gained 8 cents to $82.59 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 68 cents on Monday to $82.51. Brent crude, the price basis for international oil trading, gained 11 cents to $86.32 per barrel in London. It lost 60 cents the previous session to $86.21.

The dollar declined to 145.46 yen from Monday’s 145.52 yen. The euro gained to $1.0916 from $1.0904.

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