Stocks to fall after China GDP print

(Alliance News). – London’s stocks are expected to open lower on Sunday, after the latest data out of China stoked fears that China’s economy is in trouble.

IG’s futures show the FTSE 100 opening Monday at 7,400.07 with a 34.5-point gain (0.5%). The London Large Cap Index closed at 7,434.57 down 5.64, or 0.1%.

China’s economy expanded 6.3% on an annual basis in the second quarter. This is a surprising figure, especially given that 2022 will be a year of lockdowns and a low baseline. Analysts say that this number may have been inflated. Beijing’s National Bureau of Statistics announced the growth figures, stating that the economy had “a good momentum of improvement”.

Fu Linghui is the NBS spokesperson. He said: “The GDP growth was 4.5% on an annual basis in the first quarter, and 6.3% for the second.”

Although faster than the first three months, the reading fell below the FXStreet market consensus of 7.3%.

Quarter-on-quarter, the data on Monday revealed that the second-largest global economy grew by only 0.8% between April and June. That’s a significant slowdown compared to the 2.2% growth in the first three month of 2023.

Ipek Ozkardeskaya, an analyst at Swissquote, commented that “market sentiment is mixed” regarding the weakening of growth figures. On the one hand, a weakening economy means the government and People’s Bank of China are going to increase their efforts to ease financial conditions and speed up the recovery. “On the other hand, policies to promote growth have not had much of an impact.”

In China, the Shanghai Composite was down 1.2%, while the S&P/ASX 200 in Sydney was marginally lower.

Hong Kong’s financial markets were closed because of a typhoon. Tokyo markets were also closed for Marine Day.

The oil price has retreated after the disappointing Chinese data. A barrel Brent oil is trading at USD79.11, lower than USD80.12 on Friday.

In early European exchanges, the dollar was stronger against most major currencies.

The sterling was quoted at USD1.3117 on Monday morning, lower than the USD1.3117 that closed Friday at London’s equities closing. The euro traded lower at USD1.1225 than USD1.1240. Dollar was quoted at JPY138.56 versus JPY138.55.

In the US on Friday, Wall Street ended mixed, with the Dow Jones Industrial Average up 0.3%, the S&P 500 down 0.1% and the Nasdaq Composite down 0.2%. The earnings season began on Friday, with mixed results coming from the big US banks.

Bank of America is reporting its half-year earnings on Tuesday. Goldman Sachs will follow with IBM, Netflix, Tesla and Netflix on Wednesday.

Gold was quoted as USD1,956.32 for an ounce in the early hours of Monday. It is slightly lower than Friday’s USD1,957.56.

The UK Corporate Calendar for Monday includes the full-year financial results of Brickability, a distributor of construction materials, and Gore Street Energy Storage Fund.

Monday will be a quiet economic day, but on Wednesday the week gets moving with data on inflation from the UK.

Elizabeth Winter is a senior markets reporter for Alliance News.

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