China’s highly anticipated growth data failed to unleash significant upside
Investors were more comfortable keeping their powder dry than chasing prices sharply higher. This left the benchmark Shanghai Composite up just 0.3% on Wednesday. The sight of 13-month highs was a likely deterrent. 6.4% first quarter GDP growth against 6.3% expected looks to have been priced to perfection by the Shanghai Composite’s 31% advance in the year to date and a 37% surge by Shanghai and Shenzhen’s CSI300.
Despite March industrial output accelerating to the fastest pace since mid-2014, with robust retail sales, property investment and construction prints, it’s well understood that ramped fiscal stimulus was a key driver. Officials acknowledged that the economy still faces downside pressure, backing the market’s view that it’s too early to call a sustained turnaround. Elsewhere, the U.S.-China trade dispute remains unresolved, though Beijing and Washington are reportedly near agreement on essential aspects of a deal. The lack of a rebound in sales of cars in China, one of the goods hit hardest by U.S. tariffs, underscores remaining uncertainty.
As noted on Tuesday, Chinese stock markets have led global indices so far this year. Consequently, investor assessments of the global market outlook from here will be significantly influenced by further Chinese economic readings in the near future. The earliest of these will be official and unofficial snapshots of China’s fast-growing services sector on 30th April and 2nd May respectively.
Normalised chart: global stock markets – year-to-date [17/04/2019 12:56:27]
Source: Refinitiv/City Index
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.