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Stock markets hit record highs as Chinese GDP beats forecasts - business live Stock markets hit record highs as Chinese GDP beats forecasts - business live
(35 minutes later)
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Gold is moving higher, with the dollar weakening as the idea of another rate rise from the US Federal Reserve continues to fade.
It has added $6 an ounce to $1234, while silver is also higher, up from $15.99 to $16.17. Meanwhile with the New York manufacturing data the latest to hit the dollar, the Dow Jones Industrial Average is now in negative territory. Connor Campbell, financial analyst at Spreadex, said:
Following a far worse than forecast Empire State manufacturing index reading, falling from 19.8 to 9.8 month-on-month, there wasn’t much reason for the Dow Jones to build on its recent highs this Monday...In general the week is a bit light on Grade A data from the US, meaning the Dow’s movements may end up being dictated by its reporting companies rather than any rate hike chatter.
In the Eurozone the DAX and CAC spent the day flitting from red to green and back again...The FTSE remained far and away Monday’s best performer, even if it fell from its midday peak. The UK index is up 50 points, and is just about keeping its head above 7400, thanks to the dual boosts of some China-inspired gains in the commodity sector and a Brexit-dragged showing from sterling, which is down between 0.1-0.2% against the dollar and the euro.
The pound is set to jump back into the spotlight tomorrow morning with the release of the latest inflation reading. Analysts are expecting the figure to remain unchanged at a still eye-watering 2.9%, though it’s worth noting that the number has outperformed forecasts for the last 4 months in a row.
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After facing the public in Birmingham last year to try and explain its role and its actions to boost the economy, the Bank of England is venturing out again, this time to Liverpool.After facing the public in Birmingham last year to try and explain its role and its actions to boost the economy, the Bank of England is venturing out again, this time to Liverpool.
On 16 November, governor Mark Carney and his team will be holding the latest Future Forum, including discussing how the Bank has been trying to make its work more accessible. The Bank said:On 16 November, governor Mark Carney and his team will be holding the latest Future Forum, including discussing how the Bank has been trying to make its work more accessible. The Bank said:
We’ll be talking about economics and the economy and explaining to people how the financial world affects their lives. We’ll also be discussing what the Bank can do to raise public understanding of its role in the economy...This year, more than ever, the emphasis is on communications – that is, the exchange of ideas. We want to have a real two-way conversation with the wider public, hearing from those whose lives are influenced by the Bank’s policies, listening, just as much as speaking.We’ll be talking about economics and the economy and explaining to people how the financial world affects their lives. We’ll also be discussing what the Bank can do to raise public understanding of its role in the economy...This year, more than ever, the emphasis is on communications – that is, the exchange of ideas. We want to have a real two-way conversation with the wider public, hearing from those whose lives are influenced by the Bank’s policies, listening, just as much as speaking.
Last year there was certainly an exchange of ideas, given the meeting followed the Bank’s decision to cut interest rates in the immediate aftermath of the Brexit vote. Carney found himself on the defensive after Theresa May suggested at the Tory party conference that it was only the rich that benefitted from low interest rates and the Bank’s money printing policy. Carney said he was not going to “take instruction on our policies from the political side.”Last year there was certainly an exchange of ideas, given the meeting followed the Bank’s decision to cut interest rates in the immediate aftermath of the Brexit vote. Carney found himself on the defensive after Theresa May suggested at the Tory party conference that it was only the rich that benefitted from low interest rates and the Bank’s money printing policy. Carney said he was not going to “take instruction on our policies from the political side.”
The full story is here:The full story is here:
2.48pm BST2.48pm BST
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Wall Street edges higherWall Street edges higher
The MSCI world index may have hit a new high but elsewhere the picture is not quite as clear cut.The MSCI world index may have hit a new high but elsewhere the picture is not quite as clear cut.
On Wall Street the Dow Jones Industrial Average - which touched a new peak during Friday’s session - is virtually flat, up just 2 points ahead of a a big weak for US earnings. The S&P 500 and Nasdaq Composite were also marginally higher.On Wall Street the Dow Jones Industrial Average - which touched a new peak during Friday’s session - is virtually flat, up just 2 points ahead of a a big weak for US earnings. The S&P 500 and Nasdaq Composite were also marginally higher.
Elsewhere the FTSE 100 is currently up 28 points or 0.39% while Germany’s Dax and France’s Cac are both slightly down on the day.Elsewhere the FTSE 100 is currently up 28 points or 0.39% while Germany’s Dax and France’s Cac are both slightly down on the day.
2.05pm BST2.05pm BST
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US manufacturing disappointsUS manufacturing disappoints
Over in the US, and there have been some poor manufacturing figures from New York.Over in the US, and there have been some poor manufacturing figures from New York.
The Empire State manufacturing index dropped from 19.8 to 9.8 in July, missing expectations of a smaller decline to 15.The Empire State manufacturing index dropped from 19.8 to 9.8 in July, missing expectations of a smaller decline to 15.
#UnitedStates NY Empire State Manufacturing Index at 9.8 https://t.co/OuXXb5tAs8 pic.twitter.com/yZUe722l6H#UnitedStates NY Empire State Manufacturing Index at 9.8 https://t.co/OuXXb5tAs8 pic.twitter.com/yZUe722l6H
The news saw the dollar slip slightly, with the data adding to the idea that the US Federal Reserve may hold fire on further interest rate rises. Last week Fed chair Janet Yellen gave what was interpreted as a fairly dovish testimony to the Senate. Ahead of the Empire figures, Michael Hewson, chief market analyst at CMC Markets UK, said:The news saw the dollar slip slightly, with the data adding to the idea that the US Federal Reserve may hold fire on further interest rate rises. Last week Fed chair Janet Yellen gave what was interpreted as a fairly dovish testimony to the Senate. Ahead of the Empire figures, Michael Hewson, chief market analyst at CMC Markets UK, said:
An unexpectedly cautious testimony from Fed chief Janet Yellen to US lawmakers, as well as some disappointing economic data on the part of the US consumer and some more weak inflation data appears to raising doubts about the pace of future US rate rises.An unexpectedly cautious testimony from Fed chief Janet Yellen to US lawmakers, as well as some disappointing economic data on the part of the US consumer and some more weak inflation data appears to raising doubts about the pace of future US rate rises.
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Back with the Chinese growth figures and the financial oversight news. Sean Yokota, head of Asia strategy at Nordic bank SEB, said:Back with the Chinese growth figures and the financial oversight news. Sean Yokota, head of Asia strategy at Nordic bank SEB, said:
China’s second quarter 2017 GDP remained elevated at 6.9% year-on-year and beat the market’s expectations of 6.8%. June monthly indicators, such as industrial production and retails sales, are also showing strength. Monetary tightening has helped slow the domestic economy but the upside in Q2 2017 GDP came from stronger external demand. Due to stronger than expected growth in the first half of this year, we have revised up our 2017 GDP forecast to 6.8% from 6.7%. We still expect a mild slowdown in H2 2017.China’s second quarter 2017 GDP remained elevated at 6.9% year-on-year and beat the market’s expectations of 6.8%. June monthly indicators, such as industrial production and retails sales, are also showing strength. Monetary tightening has helped slow the domestic economy but the upside in Q2 2017 GDP came from stronger external demand. Due to stronger than expected growth in the first half of this year, we have revised up our 2017 GDP forecast to 6.8% from 6.7%. We still expect a mild slowdown in H2 2017.
Over the weekend President Xi of China announced the creation of a super regulator called the Financial Stability and Development Committee (FSDC). This move clearly shows that the government and President Xi see the increasing risk from financial market instability as a priority. The contagion risk bleeding from financial market risk to political risk has grown to a point where President Xi needs to monitor this at the State Council level. Another implication is that financial market development will slow as when authorities are focused on risk, the market becomes more conservative and liberalisation slows.Over the weekend President Xi of China announced the creation of a super regulator called the Financial Stability and Development Committee (FSDC). This move clearly shows that the government and President Xi see the increasing risk from financial market instability as a priority. The contagion risk bleeding from financial market risk to political risk has grown to a point where President Xi needs to monitor this at the State Council level. Another implication is that financial market development will slow as when authorities are focused on risk, the market becomes more conservative and liberalisation slows.
1.43pm BST1.43pm BST
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The other news out of China today is that Winnie the Pooh has seemingly fallen foul of the country’s internet censors.The other news out of China today is that Winnie the Pooh has seemingly fallen foul of the country’s internet censors.
The much-loved, tubby bear can no longer be discussed on Chinese social media sites, apparently as part of a new crackdown by Beijing.The much-loved, tubby bear can no longer be discussed on Chinese social media sites, apparently as part of a new crackdown by Beijing.
But it’s not all bad for Pooh; he has been given a prime position on the front page of the Financial Times, which says:But it’s not all bad for Pooh; he has been given a prime position on the front page of the Financial Times, which says:
Posts including the Chinese name of the fictional bear were censored on Sina Weibo, ChinaTwitter-like platform, over the weekend, while a collection of animated gifs featuring the bear were removed from social messaging app WeChat.Posts including the Chinese name of the fictional bear were censored on Sina Weibo, ChinaTwitter-like platform, over the weekend, while a collection of animated gifs featuring the bear were removed from social messaging app WeChat.
While no official explanation was given, observers suggested the crackdown was related to previous comparisons of President Xi Jinping with the portly bear created by the English author AA Milne that went viral.While no official explanation was given, observers suggested the crackdown was related to previous comparisons of President Xi Jinping with the portly bear created by the English author AA Milne that went viral.
Winnie the Pooh makes the front page of the @FT (and Xi) pic.twitter.com/OZ1JUUveyzWinnie the Pooh makes the front page of the @FT (and Xi) pic.twitter.com/OZ1JUUveyz
1.40pm BST1.40pm BST
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Apart from China’s growth figures, economists are also digesting the conclusions of a conference on regulation held by Chinese officials last weekend.Apart from China’s growth figures, economists are also digesting the conclusions of a conference on regulation held by Chinese officials last weekend.
There’s much interest in president Xi’s decision to create a cabinet-level committee to coordinate financial oversight. That could be a sign that Beijing is more concerned about problems brewing in the country’s financial system.There’s much interest in president Xi’s decision to create a cabinet-level committee to coordinate financial oversight. That could be a sign that Beijing is more concerned about problems brewing in the country’s financial system.
The official statement issued after the conference said that the “eternal theme” was to prevent systemic risk building up in the Chinese economy.The official statement issued after the conference said that the “eternal theme” was to prevent systemic risk building up in the Chinese economy.
Premier Li Keqiang called for financial oversight to be “professional, consolidated and penetrating”, and there was also a warning that failing to spot problemsPremier Li Keqiang called for financial oversight to be “professional, consolidated and penetrating”, and there was also a warning that failing to spot problems
Strong words were also heard on greater accountability for regulators, with the statement saying it would be a “dereliction of duty” if regulators fail to spot risks and tackle them in time...Strong words were also heard on greater accountability for regulators, with the statement saying it would be a “dereliction of duty” if regulators fail to spot risks and tackle them in time...
Capital Economics says these pledges are more important than the actual growth figures.....Capital Economics says these pledges are more important than the actual growth figures.....
Big China econ news not the upbeat data but the message from Financial Work Conf: efforts to limit credit risks to continue for yearsBig China econ news not the upbeat data but the message from Financial Work Conf: efforts to limit credit risks to continue for years
of course easy to say that when growth strong. True test is whether tackling credit risk remains priority when growth slows. Still uncertainof course easy to say that when growth strong. True test is whether tackling credit risk remains priority when growth slows. Still uncertain
This also explains why the Chinese stock market fell today, while other market rallied. A clampdown on risky lending, or financial bubbles, would surely feed through to asset prices...This also explains why the Chinese stock market fell today, while other market rallied. A clampdown on risky lending, or financial bubbles, would surely feed through to asset prices...
1.00pm BST1.00pm BST
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Several economists are predicting that China’s growth rate will ease, sooner or later.Several economists are predicting that China’s growth rate will ease, sooner or later.
Zhou Hao, an economist with Commerzbank, says (via the WSJ):Zhou Hao, an economist with Commerzbank, says (via the WSJ):
“Though the Chinese economy was holding up better than expected in the first half of the year, a slowdown is kind of inevitable.”“Though the Chinese economy was holding up better than expected in the first half of the year, a slowdown is kind of inevitable.”
And Robin Bew of the Economist Intelligence Unit reckons Chinese growth will hold up for a few months more.And Robin Bew of the Economist Intelligence Unit reckons Chinese growth will hold up for a few months more.
#China Q2 GDP 6.9%, slightly ahead of our 6.7% forecast. Not expecting serious slowdown until policy tightening after Plenum late this year#China Q2 GDP 6.9%, slightly ahead of our 6.7% forecast. Not expecting serious slowdown until policy tightening after Plenum late this year
12.25pm BST12.25pm BST
12:2512:25
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12.24pm BST12.24pm BST
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11.50am BST11.50am BST
11:5011:50
If China’s GDP does hold up, then it could post its first year of faster growth since 2010.If China’s GDP does hold up, then it could post its first year of faster growth since 2010.
#China 2Q GDP growth tops forecasts on strong investment, consumption. Consumption fuelled 63.4% of GDP growth in 1H https://t.co/7epNTZVyY6 pic.twitter.com/9rEbKN7Xqw#China 2Q GDP growth tops forecasts on strong investment, consumption. Consumption fuelled 63.4% of GDP growth in 1H https://t.co/7epNTZVyY6 pic.twitter.com/9rEbKN7Xqw
11.46am BST11.46am BST
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Dan Wang, China analyst at the Economist Intelligence Unit, believes today’s growth figures bode well for the next six months....Dan Wang, China analyst at the Economist Intelligence Unit, believes today’s growth figures bode well for the next six months....
China’s economy will hold up for the second half of the year, given sustained state-led investment and robust household spending. The monetary policy will remain neutral--cracking down shadow banking while increasing lending through formal banking channel.China’s economy will hold up for the second half of the year, given sustained state-led investment and robust household spending. The monetary policy will remain neutral--cracking down shadow banking while increasing lending through formal banking channel.
Given the high base in 2017, however, to sustain high growth for 2018 will be tough.Given the high base in 2017, however, to sustain high growth for 2018 will be tough.
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