Data showing Chinese consumer prices rising more than expected last month provided some fresh optimism over the world's number two economy
Data showing Chinese consumer prices rising more than expected last month provided some fresh optimism over the world's number two economy AFP

Equities fluctuated Monday with traders taking a breather after the past weeks' healthy run as they absorbed weak Chinese data and news that Beijing planned to start selling almost $140 billion of bonds to boost the stuttering economy.

Reports that the White House planned to ramp up tariffs on clean energy products from the Asian country, a sharp drop in US consumer confidence and a pick-up in inflation expectations weighed on sentiment as eyes turn to the release later this week of the latest consumer price index (CPI).

The readings follow a recent rally across world markets fuelled by optimism that the US Federal Reserve and other major central banks will soon cut interest rates.

The week was set to begin on a tepid note after figures showed a drop in a broad measure of credit in China that sparked worries of a further slackening in the world's number two economy.

That came as the Wall Street Journal reported that the White House is looking at almost quadrupling tariffs on Chinese electric vehicles as part of a plan that will also target batteries and solar cells.

A decision, expected on Tuesday according to reports, would come as President Joe Biden gears up for a rematch with Donald Trump in November's presidential election.

Last month, he urged for a tripling of tariffs on steel and aluminium as he courted blue-collar voters.

Still, analysts said the decision on EVs would not likely have much impact on China's growth as the sector was not reliant on US buyers, while some said retaliatory actions were unlikely.

Investors did take some heart after it emerged that Chinese authorities were set to begin selling the first batch of almost $140 billion in sovereign bonds this week to raise cash to boost the economy.

The sale comes after leaders announced plans in March, which fanned hopes for a huge spending spree aimed at re-energising growth.

The central government will begin issuing some 30-year bonds Friday as part of a planned sale of more than $138 billion of debt, according to a notice posted to the Finance Ministry's website.

Other bonds with tenors of 20 years and 50 years will go on sale on May 24 and June 14, respectively.

The news came after weekend figures showing China's CPI rose more than expected in April, marking the third straight month of gains and providing some fresh hope for the economy.

In New York, the Dow and S&P 500 rose, even as a report showed consumer sentiment tumbled in April to its lowest level since November, while a survey of inflation expectations over the next year picked up.

Investors are now keeping a close eye on the US CPI, which is due Wednesday and will be pored over for an idea about the Fed's plans. The reading comes after three straight months of forecast-beating readings that have seen a whittling away of rate cut expectations.

Meanwhile, Dallas Fed chief Lorie Logan warned she thought it too early to think about any reductions, while governor Michelle Bowman did not foresee any this year.

"As long as the labour market remains tight, consumer resilience could continue to dampen hopes of inflation cooling off," Subadra Rajappa, at Societe Generale in New York, said.

"A resumption of the disinflationary trend is imperative for the Fed to consider cutting this year."

Discussion on the US rate outlook comes as expectations rise that the European Central Bank and Bank of England are planning to cut in the summer.

However, Asian markets were mixed, with Hong Kong, Singapore, Taipei, Manila and Jakarta all higher, while Sydney and Seoul were flat. Tokyo, Shanghai, Wellington, Mumbai and Bangkok fell.

London and Paris opened barely moved, while Frankfurt edged higher. All three had ended Friday at record highs.

Tokyo - Nikkei 225: DOWN 0.1 percent at 38,179.46 (close)

Hong Kong - Hang Seng Index: UP 0.6 percent at 19,082.94

Shanghai - Composite: DOWN 0.2 percent at 3,148.02 (close)

London - FTSE 100: FLAT at 8,436.18

Dollar/yen: DOWN at 155.79 yen from 155.88 yen on Friday

Euro/dollar: DOWN at $1.0770 from $1.0772

Pound/dollar: UP at $1.2529 from $1.2525

Euro/pound: DOWN at 85.98 from 86.06 pence

West Texas Intermediate: DOWN 0.1 percent at $78.16 per barrel

Brent North Sea Crude: DOWN 0.2 percent at $82.66 per barrel

New York - Dow: UP 0.3 percent at 39,512.84 (close)