China shows promise but markets in a spin

China's economy looks to be on its way to recovery as reflected by improved home sales, a rebound in consumer spending, industrial output and investment.

But that did not help global stocks amid impending rate hikes and the failure of the Silicon Valley Banks.

European and US markets fell in response to the European Central Bank's indication of a potential 0.5 percentage point rate hike yesterday, despite some analysts seeing signs of relief regarding the SVB issue.

European markets were sharply lower, with banking stocks in deep negative territory amid the global SVB fallout and more bad news for Credit Suisse which fell 23 percent after its biggest lender, Saudi National Bank, said it would not be able to offer it more financial help.

The pan-European Stoxx 600 index was down 2.4 percent, with all sectors trading in the red.

Stocks in the US fell when trading started. The Dow Jones Industrial Average fell 476 points or 1.5 percent, the Nasdaq Composite lost 1.4 percent, while the S&P 500 dropped 1.1 percent.

Traders were also digesting a slew of economic data from China, where retail sales rose as much as estimated while factory output was fractionally lower than projected.

China's embattled property sector made progress in a climb out of a months-long slump as official data for January-February yesterday showed much narrower declines in home sales, developer investment and construction starts.

Home sales by floor area in the first two months of 2023 fell 3.6 percent from 12 months earlier, according to data from the National Bureau of Statistics, compared with a 24-percent decline for the whole of last year.

The narrower sales decline followed a rise in new home prices in January - the first uptick for 12 months.

China also reported a rebound in consumer spending, industrial output and investment this year after coronavirus restrictions were dropped, though there was a warning of risks to recovery as unemployment rose.

Retail sales rose 3.5 percent in January and February compared to the same period last year. Industrial output rose 2.4 percent and fixed-asset investment grew strongly as local governments increased infrastructure spending to spur recovery. But the unemployment rate increase pointed to a weakness in domestic demand.