An Asia-Pacific equity index was propped up by gains in China and Hong Kong. Stocks and bonds of Chinese developers rallied on a possible move to let state-owned firms guarantee the sale of new onshore notes. S&P 500 and Nasdaq 100 futures were steady while European contracts rose.

US data on Monday pointed to rapidly cooling manufacturing and slumping homebuilder sentiment, adding to economic risks after weak Chinese figures. Demand for havens helped Treasuries extend an advance from the Wall Street session and spurred purchases of Australian and New Zealand debt.

Oil slid below $89 a barrel on worries about demand as well as the possible return of Iranian supplies. The dollar gauge was firm.

Bets on cooling inflation and less aggressive monetary tightening as the world economy slows have contributed to a near 13% rebound in global equities from June lows. The danger for the bounce lies in the possibility of persistent price pressures that keep borrowing costs higher for longer, leading to recession.

The market is still “breathing a little sigh of relief thinking the Fed is not going to be as aggressive in tightening”, Margie Patel, senior portfolio manager at Allspring Global Investments, said on Bloomberg Television. Many countries face the threat of recession but US fundamentals are better and the main risk is if the Federal Reserve slams on the brakes, she added.

US data showed a gauge of New York state manufacturing activity plunged by the second-most in figures going back to 2001. US homebuilder sentiment fell for an eighth-consecutive month, the worst stretch since the 2007 housing collapse.

Those reports followed an unexpected cut in interest rates by China on Monday ahead of figures showing the nation’s economic slowdown deepened in July. The offshore yuan stabilised after sinking in the wake of the disappointing data and monetary steps.

“The risk of the markets going below the June lows is quite high,” Shane Oliver, head of investment strategy at AMP Services Ltd., said on Bloomberg Television. Sagging economic data presage “weaker earnings growth ahead in the US”, he said. BM