Chinese and European equities made moderate gains on Tuesday as investor sentiment was boosted by stronger economic growth data in China following years of disruptive pandemic policies.
China’s gross domestic product rose 4.5 per cent year on year in the first quarter, well above analysts’ expectations of a 4 per cent rise, as the world’s second-largest economy began to recover after easing its longstanding zero-Covid policy.
The CSI 300 index of Shanghai- and Shenzhen-listed shares erased earlier losses to close up 0.3 per cent. In Hong Kong, the Hang Seng index was down 0.8 per cent.
In Europe, the region-wide Stoxx 600 opened up 0.2 per cent, Germany’s Dax rose 0.1 per cent and London’s FTSE 100 gained 0.2 per cent.
Lisheng Wang, China economist at Goldman Sachs, said the growth outperformance suggested “a very strong post-reopening recovery.”
Even so, the growth rate fell short of the government’s full-year target of 5 per cent. “We expect activity data to improve further [in the coming months] on a very low base last year when Shanghai imposed stringent lockdowns, in addition to reopening impulse and still accommodative macro policies,” Wang added.
Chinese commodities markets also responded positively to a 4.1 per cent rise in property sales value. Iron ore futures traded in the north-eastern Chinese city of Dalian jumped as much as 3.5 per cent to Rmb794.5 ($116) a metric tonne following the data release, while Shanghai-traded contracts for steel rebar rose as much as 1.9 per cent to Rmb3,981 a metric tonne.
Elsewhere in the region, Japan’s benchmark Topix rose 0.7 per cent while Australia’s S&P/ASX 200 shed 0.3 per cent.
Chaoping Zhu, global market strategist at JPMorgan Asset management, said that while recent data points pointed to a “steady economic recovery . . . some challenges still exist”.
Zhu said a recovery in Chinese business confidence “might be slower than expected”, warning that although exports had outperformed in March “export growth might dip again” on slowing demand from developed economies.
In Europe and the US, investors continued to look for signs of slowing inflation and economic activity, which may point to the central banks nearing the end of their rate-raising cycles.
US futures were tipped to open flat, with the blue-chip S&P 500 and tech-heavy Nasdaq poised to make minimal gains.
In recent days, the US has seen mixed earnings results out of several major banks. On Monday, the KBW Bank index added 1.4 per cent, despite a 9.2 per cent decline in State Street shares after quarterly profits missed expectations. Bank of America, Morgan Stanley and Wells Fargo gained 2.9 per cent, 3 per cent and 4.2 per cent.
The dollar index, which measures the greenback against six other currencies, fell 0.2 per cent, while the euro and sterling fell 0.3 per cent against the dollar.
Brent crude and West Texas Intermediate, the US equivalent, each rose 0.4 per cent.
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