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
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