Although Japan's Nikkei 225 has convulsed this month, losing almost 13 percent before bouncing back on Monday to gain over 7 percent, China's Shanghai composite was muted yesterday in its first day back from the week-long new year holiday, closing up 0.5 percent. On Tuesday, the Nikkei lost 1 percent in early trade before hovering around flat, while Shanghai was up almost 2 percent.
The measured response in China was at odds with the tumult in global financial markets since the beginning of the year, with volatility across the equities, forex and commodities complexes due to macroeconomic uncertainties stemming from China's slowdown, and exacerbated by an oil price slump and Japan's move into negative interest rates.
State Street forecasts global growth of 3 percent this year, and 6 percent growth in China amid a soft landing. In comparison, the International Monetary Fund projects global growth of 3.4 percent and Chinese growth of 6.3 percent in 2016, according to its January forecast.
"While we do not see a trigger for a sharp slowdown, the chance of a series of small disappointments from a number of economies pushing the global economy into a shallow recession or a 'neo-recession' would seem to be around 33 percent and rising," Poullaouec wrote in a note to CNBC.