China GDP Rises, UK Unemployment Levels Beat Drop Forecast
July 16, 2014 7:39 amVideo
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European stock markets rose after upbeat comments on the US economy by Federal Reserve chairwoman Janet Yellen and better than expected GDP figures out of China, hitting government growth targets. The Stoxx Europe 600 Index rose 0.5% while the FTSE100 up 0.6% and the DAX up around 0.5%.
Overnight in Asia, the Shanghai Composite fell 0.2% but Hong Kong’s Hang Seng rose after government data showed China’s economy accelerated from an annual pace of 7.4% in the first quarter to 7.5% in Q2, as policy measures take effect in the world’s second largest economy.
The 7.5% level is the target at which Chinese policy makers are comfortable with growth, which could indicate that the central bank there may refrain from adding further stimulus measures in the near-term.
Other data overnight showed Chinese bank loans and other forms of credit grew at their fastest pace for three months in June. Elsewhere, Chinese industrial output climbed from 8.8% to 9.2%, beating forecasts and hitting a 2014 high. On the downside, the pace of retail sales slowed from 12.5% to 12.4%, which fell short of market expectations.
In the US on Tuesday, Fed head Yellen kicked off her testimony to US lawmakers, keeping a generally dovish tone but stressing that “considerable uncertainty” over the outlook for the US economy would make it difficult to pinpoint the timing of future interest rate rises.
At the same time, she also warned that the performance of momentum of some tech and bio-tech stocks appear to be stretched which could cause some volatility in both sectors – today Yellen continues to give testimony on Capitol Hill.
Over in Portugal, the central bank there said shareholders in Banco Espirito Santo are willing to inject more capital after a second affiliate failed to repay short-term debt – shares in the lender rose as such. Looking ahead, we have more corporate earnings out of the US with numbers from Bank of America, BlackRock and eBay.
We also have US industrial production and MBA mortgage applications data. Out in the UK already, labour data showed the UK’s headline rate of unemployment moved lower again to 6.5% in the three months ended in May, down from 6.6% for the previous three-month period – this is in line with market expectations.
Also, the number of people claiming unemployment benefits fell sharply, down by 36,000 in June versus forecasts of only a 27,000 person drop. In Europe, attention will be focussed on European Union leaders who are meeting in Brussels today to discuss the possibility of widening sanctions against Russia over its involvement in the Ukraine conflict.
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