Comment: European Equities Rally On China GDP Data
April 16, 2014 5:46 am
Growth figures out of China a little better than expected, in at 7.4% for the Q1 versus expectations of around 7.3% – that’s still below 7.5% target set by policymakers in the country and down from 7.7% in Q4 – on the whole, a mixed number; sure, it suggests the economy there hasn’t slowed down as aggressively as some had thought but it’s still in a downward trend.
The upshot is that activity in China picked up in March; fixed asset investments and industrial output both advanced during the month. If we continue to see improvement in Chinese economic data, then markets may be more confident about the country’s outlook. For the moment though, there’s no reason for Chinese policymakers to step in and prop up the economy.
Asian markets reacted well to the China GDP figures, feeding into European market price-action this Wednesday morning; FTSE100 up 43 points, the DAX higher by 101 points and the EuroStoxx50 index up 32 points. Risk-currencies advance while gold regains composure after getting hammered in the previous session. Core government bonds in that case are falling out of favour with investors with both UK gilts and German bunds falling.
The return of risk appetite comes in spite of the persistent worries about the escalating situation in the Ukraine where the country’s acting President Turchynov launched special ops programme to force out pro-Russian rebels from two cities eastern Ukraine. This morning, the situation in Ukraine, although worrying as its fluid, is being put aside by financial markets who are now focused on the better China data for inspiration to snap up assets at lower levels.
Overnight in the US, the S&P500 closed up 0.7%, paring session losses thanks to better numbers out of Coca Cola and Johnson & Johnson. After the closing bell in the US, Yahoo and Intel both reported better figures for Q1 which should go some way later in the session to help support US tech shares. Looking ahead, eyes are on UK jobs data and US housing starts.
Growth figures out of China a little better than expected, in at 7.4% for the Q1 versus expectations of around 7.3% – that’s still below 7.5% target set by policymakers in the country and down from 7.7% in Q4 – on the whole, a mixed number; sure, it suggests the economy there hasn’t slowed down as aggressively as some had thought but it’s still in a downward trend.
The upshot is that activity in China picked up in March; fixed asset investments and industrial output both advanced during the month. If we continue to see improvement in Chinese economic data, then markets may be more confident about the country’s outlook. For the moment though, there’s no reason for Chinese policymakers to step in and prop up the economy.
Asian markets reacted well to the China GDP figures, feeding into European market price-action this Wednesday morning; FTSE100 up 43 points, the DAX higher by 101 points and the EuroStoxx50 index up 32 points. Risk-currencies advance while gold regains composure after getting hammered in the previous session. Core government bonds in that case are falling out of favour with investors with both UK gilts and German bunds falling.
The return of risk appetite comes in spite of the persistent worries about the escalating situation in the Ukraine where the country’s acting President Turchynov launched special ops programme to force out pro-Russian rebels from two cities eastern Ukraine. This morning, the situation in Ukraine, although worrying as its fluid, is being put aside by financial markets who are now focused on the better China data for inspiration to snap up assets at lower levels.
Overnight in the US, the S&P500 closed up 0.7%, paring session losses thanks to better numbers out of Coca Cola and Johnson & Johnson. After the closing bell in the US, Yahoo and Intel both reported better figures for Q1 which should go some way later in the session to help support US tech shares. Looking ahead, eyes are on UK jobs data and US housing starts.
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