Asian stocks muted, Chinese shares slide on weak GDP

investing.com:

Investing.com-- Most Asian stocks moved in a flat-to-low range on Monday, while Chinese markets fell sharply after data showed that economic growth in the country slowed substantially through the second quarter. 

Regional trading volumes were somewhat slim, on account of a market holiday in Japan and a trading halt in Hong Kong, as the city faces its first major typhoon this year.

A rally in Asian technology stocks, triggered by waning expectations for more U.S. interest rate hikes this year, now appeared to have run out of steam, with concerns over slowing growth in the region’s largest economy taking the helm.

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes were by far the worst performers in Asia, down over 1% each after data showed that economic growth slowed in the second quarter.

China’s Gross Domestic Product (GDP) rose 0.8% in the second quarter from the first. The reading was higher than expectations for growth of 0.5%, but substantially weaker than the 2.2% jump recorded in the first quarter. 

The year-on-year GDP reading missed expectations, growing 6.5% against expectations of 7.3%. But the reading was largely driven by a weak basis for comparison from 2022, when China was still maintaining its strict zero-COVID policy.

Monday's data showed that an economic recovery in Asia’s largest economy was running out of steam, and that the government will likely need to roll out more stimulus measures in the coming months.

But bets on more interest rate cuts in the country were also dented, as the People’s Bank of China kept its medium-term lending rates steady on Monday. The move indicates that the PBOC will also hold its benchmark Loan Prime Rate steady later this week.

Weakness in China bodes poorly