European stocks are poised for an early decline, mirroring the downturn in Asian equities, as signs of economic weakness in China and lowered expectations for US rate cuts weigh on risk sentiment. Contracts for the Euro Stoxx 50 fell, following Thursday’s declines in US stocks and a downbeat day in Asian markets that saw a key regional shares gauge drop for the first time in six sessions.
The negative sentiment was exacerbated by further signs of stress in China’s economy. Home sales in China fell at a faster pace in April compared to the previous month, and consumer spending unexpectedly slowed, raising new alarms about the country’s economic health. “A-share investor sentiment dropped notably versus the prior week,” noted Morgan Stanley strategists led by Laura Wang in a Friday report, referring to Chinese onshore stocks. “Weak credit and inflation data, as well as the US tariff hike announcement, renewed investor concerns regarding weak macro conditions and ongoing geopolitical friction.”
The impact was felt across various Asian markets. Shares in mainland China, Australia, and South Korea declined, while Japanese and Hong Kong stocks showed resilience, with the Hang Seng Index trading near a nine-month high. Robust financial results buoyed major tech firms Alibaba Group Holding Ltd. and Baidu Inc., contributing to the positive movement in Hong Kong stocks.
In the US, equity futures showed little change after a slight decline for the S&P 500 and Nasdaq 100 on Thursday. The mixed performance reflects the cautious market outlook amid ongoing global economic concerns. Investors are closely monitoring these developments, as weak data from major economies and uncertain geopolitical conditions continue to influence market dynamics. The early decline in European stocks underscores the fragile nature of current market sentiment, shaped by global economic indicators and policy expectations.
