CNBC Daily Open: The Chinese dragon's still dozing

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Blinken unexpectedly meets Xi
U.S. Secretary of State Antony Blinken ended his China visit by meeting with Xi Jinping, the country’s president. The meeting was initially unconfirmed, suggesting that it’s a small step in repairing frayed U.S.-China ties. Blinken’s meeting could pave the way for U.S. President Joe Biden to meet Xi in November.

Markets wanted more
U.S. markets were closed Monday to commemorate Juneteenth, the day when slavery in America ended, but stock futures slipped slightly. Asia-Pacific stocks traded mixed Tuesday. China’s Shanghai Composite fell 0.18% and Hong Kong’s Hang Seng Index sank 1.53% on the back of shallower-than-expected interest rate cuts by the Chinese central bank — more on that below.

Just cosmetic cuts
The People’s Bank of China lowered its one-year and five-year loan prime rate by 10 basis points each; the former is now 3.55% and the latter 4.2%. Economists think the cuts are too minor to affect monetary conditions. Nonetheless, they signal to markets that Chinese officials are ready to step in and support economic growth.

Succession, Alibaba style
Eddie Wu, one of Alibaba’s co-founders and current chairman of Taobao and Tmall Group, will succeed Daniel Zhang as chief executive of Alibaba. Joe Tsai, the present executive vice chairman, will rise to the position of chairman. Those appointments are effective Sept. 10. Zhang will remain chairman and CEO of Alibaba’s Cloud Intelligence Group.

[PRO] Crossing the dots
A “golden cross” is when a stock’s 50-day moving average rises above its 200-day trend line. Analysts think the event’s a bullish sign that will usher in further rallies. CNBC Pro combed through FactSet data and found six stocks that are on the verge of forming the golden cross.

Back in January, when China abruptly abandoned its “zero-Covid” policy, analysts were by equal measures worried and excited. Worried, because a massive economic engine suddenly roaring back to life could stoke the flames of inflation even higher. Analysts braced for higher commodities and oil prices. On the other hand, many saw China as a potential driver of a global economy that had lost its way. To quote Standard Chartered Chairman José Viñals: “The Chinese economy is going to be on fire and that’s going to be very, very important for the rest of the world.”

At approximately the halfway mark of the year, here’s how China’s stacking up against those expectations. In short: It seems everyone’s wrong about China. Instead of turning up the heat of inflation, China’s combating a potential deflationary problem domestically. The country’s consumer price index rose only 0.2% year over year, while its producer price index plummeted 4.6%. Recent economic data’s been so disappointing that Wall Street banks have started to cut their expectations of China’s economic growth this year — though their projections are, optimistically, still higher than the country’s own target of “around 5%.” Meanwhile, oil prices have been sliding despite Saudi Arabia announcing surprise cuts to production, and iron ore prices aren’t doing so hot either because China’s demand for steel is projected to fall.

China’s economy, to put it plainly, isn’t doing so well. It’s true things might turn around: The country’s central bank has started cutting rates, and analysts think fiscal stimulus is on its way. But for now, the Chinese dragon’s still dozy — and things are starting to feel a little too chilly.