US and China Hold Talks, Banks Lower China’s Growth Forecasts: Financial Market Updates

US and China Hold Talks to Address Differences as Banks Lower China’s Growth Forecasts

The United States and China engaged in talks over the weekend in an effort to address their differences and improve relations. US Secretary of State Anthony Blinken met with his Chinese counterpart Qin Gang, describing the talks as frank and constructive. The discussions likely focused on trade, the semiconductor industry, Taiwan’s self-governing status, and human rights concerns. While concrete progress is unlikely, the fact that the two sides are engaging in dialogue is seen as a positive step to prevent conflicts between the two global economic superpowers.

Goldman Sachs Cuts China’s Growth Forecasts

Goldman Sachs has joined a growing number of major banks in lowering its growth forecasts for China. The influential investment bank reduced its full-year real GDP growth forecast for the world’s second-largest economy from 6% to 5.4%. It also lowered its 2024 growth forecast from 4.6% to 4.5%. The downturn in China’s real estate market was cited as the main reason for the lowered forecasts. Other banks, including Bank of America, JPMorgan, UBS, and Standard Chartered, have also revised their growth forecasts for China.

Concerns about Global Growth Weigh on European and Asian Markets

European and Asian stock markets experienced declines on Monday as investors expressed concerns about the global economy’s outlook. Germany, the UK, and France all saw losses, with Japan, Hong Kong, and China also experiencing declines. Slowing growth in Europe, where the eurozone entered a recession in the first quarter of the year, and in China, the main driver of regional growth, has contributed to investor worries. Additionally, the US Federal Reserve’s indication of potential rate hikes to combat inflation has added to concerns of a global economic slowdown.

Central Banks Remain in the Spotlight

Central banks will continue to be in focus this week, with the People’s Bank of China expected to cut its prime lending rate by 10 basis points to stimulate its economy. The Bank of England is also anticipated to raise interest rates by 25 basis points, as inflation in the country exceeds the target level of 2%. Rate hikes are also expected in Norway and Switzerland. Furthermore, Hafiz Gaye Erkan, the newly appointed governor of Turkey’s central bank, will hold his first monetary policy meeting. Expectations are high that Erkan’s appointment will lead to a reversal of Turkey’s unorthodox policies that have negatively impacted the national currency.

Oil Prices Decline Amid Concerns of China’s Slowing Economic Recovery

Crude oil prices fell on Monday due to fears that China’s slowing economic recovery will result in reduced demand for crude oil, as China is the world’s largest importer. Futures were down 0.3% to $71.72 a barrel, while the contract was down 0.3% to $76.61 a barrel. Last week, both benchmarks recorded their first weekly gains of the month, aided by the Federal Reserve’s decision to suspend monetary tightening and expectations of continued stimulus measures in China. However, major banks, including Goldman Sachs, have recently cut their growth forecasts for China, raising concerns about the country’s recovery after the pandemic.

Disclaimer: This article is a summary of the original news article published by Reuters.

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Hong Kong, and South Korea also facing negative market performance. The concerns were primarily driven by cautious sentiment towards China’s economic slowdown and its potential impact on global growth. The lowered growth forecasts by major banks, including Goldman Sachs, further fueled these concerns, as it reflected a more pessimistic outlook for China’s economy. Overall, the talks between the United States and China to address their differences were seen as a positive step towards preventing conflicts, but the market reaction suggests that investors remain cautious about the potential repercussions on global markets.