Today’s trading opened in the green for both Asian and European markets. The rally in Asian stocks may have been fueled by weak Chinese economic growth data that suggests more stimulus ahead.
China weakness continues
China’s GDP (gross domestic product) rose 6.8% in the fourth quarter according to official Chinese government figures, as compared to the previous year’s first quarter. The number indicates that the Chinese economy continues to lose momentum following a major growth slowdown since 2009. Alongside this, the region’s industrial production grew 5.9% in December, disappointing market expectations of 6% growth.
China’s retail sales dropped marginally against December expectations as retail grew 11.1% versus projections of 11.3%. The People’s Bank of China (PBOC) set the most recent dollar-yuan fix at 6.5596.
Asian stocks higher
Reacting to the reports, the Shanghai SE Composite Index reversed its direction and surged by 3.22% to the psychologically important 3,000 level. Hong Kong’s Hang Seng followed on cue and was up by 2.07% to 19,635. Overall, it seems that China’s weak numbers were already priced in the market and did not come as a great surprise.
Meanwhile, Japan’s Nikkei 225 had a mixed session closing up by 0.55% to 17,048.37. Japanese economy minister Akira Amari has claimed that the weakness in Japanese stocks was driven by external factors such as pressures in emerging markets and the oil rout.
European markets traded up, ending two consecutive sessions of losses. France’s CAC 40 led the rally with 1.93% gains followed by Europe’s Euronext 100, which was up by 1.88% to 838.14. US financial markets remained closed on Monday but opened 1% higher this morning.
Following the developments in China, world markets will now keep a close tab on the oil price. Brent crude had a small rebound and was seen trading above $20 per barrel. Concerns regarding the oil glut worsened as Iran prepares to introduce more oil post sanctions, which is likely to worsen the current global oil supply glut further.