LONDON: Global equities wobbled Tuesday as investors tracked corporate news but were underwhelmed by the latest annual economic growth target from Asian powerhouse China.
Asia faltered after China set a 2024 economic growth target of five percent, in line with last year but well off the double-digit expansion that for years drove the world’s second-largest economy.
Tokyo flatlined, one day after its benchmark Nikkei index hit a record high and closed above 40,000 points for the first time, and Hong Kong fell heavily but Shanghai eked out gains.
In Europe, Frankfurt’s stock market was hit after German chemicals giant Bayer revealed that it plunged deep into the red in 2023, weighed down by woes related to its glyphosate-based weedkillers.
European stocks hover near record highs
On the eve of a key UK budget update, London won a slight boost from news that network testing firm Spirent Communications agreed to a £1-billion ($1.3-billion) takeover from US communications equipment maker Viavi.
The dollar wavered before key US data and Thursday’s eurozone interest rate decision, while oil prices steadied amid jitters over the outlook for Chinese energy demand.
Gold and bitcoin closed in on record highs.
The precious metal is being boosted by its haven status as a recent dollar rally peters out ahead of expected cuts to US interest rates.
The world’s biggest cryptocurrency is soaring thanks to strong demand following moves that make investing in bitcoin more accessible despite tight supplies.
Investors ‘disappointed’
“While new economic targets were seen as positively ambitious from China, investors were disappointed to see a lack of significant fiscal reforms,” said ActivTrades analyst Pierre Veyret.
At the National People’s Congress, an annual rubber-stamp legislative session, the focus this week will be on China’s struggling economy, which is beset by a prolonged property sector crisis, record youth unemployment, and a global slowdown that is hammering demand for Chinese exports.
While experts have repeatedly called for stronger stimulus measures from the government, the conclave this week is not expected to unveil big-ticket bailouts.
The news weighed particularly hard on Hong Kong’s stock market which shed almost three percent.
“China’s growth target for 2024 has underwhelmed the market,” said Kathleen Brooks, analyst at XTB trading group analyst, and even though a more modest target of 4.6 percent had been expected.
“The market reaction… so far is a sign that confidence around China remains weak. It also highlights how central the US remains to global growth more generally,” she added.
Wall Street had retreated on Monday as investors locked in profits after recent rallies fuelled by tech optimism.
Analysts attributed the pullback to a wait-and-see attitude to a heavy news week that also includes US jobs data and congressional testimony from Federal Reserve boss Jerome Powell.
Most analysts expect highly-anticipated Fed rate cuts to start later this year, as officials have voiced caution about trimming too soon while they await further inflation data.
The European Central Bank is forecast to hold interest rates Thursday, analysts said, as officials want to ensure eurozone inflation is on a clear downward path.
Key figures around 1145 GMT
London - FTSE 100: UP 0.1 percent at 7,646.34 points
Paris - CAC 40: FLAT at 7,959.76
Frankfurt - DAX: DOWN 0.1 percent at 17,703.36
EURO STOXX 50: DOWN 0.2 percent at 4,905.51
Tokyo - Nikkei 225: FLAT at 40,097.63 (close)
Hong Kong - Hang Seng Index: DOWN 2.6 percent at 16,162.64 (close)
Shanghai - Composite: UP 0.3 percent at 3,047.79 (close)
New York - Dow: DOWN 0.3 percent at 38,989.83 (close)
Euro/dollar: DOWN at $1.0853 from $1.0859 on Monday
Dollar/yen: DOWN at 150.42 yen from 150.51 yen
Pound/dollar: DOWN at $1.2683 from $1.2691
Euro/pound: UP at 85.57 pence from 85.54 pence
Brent North Sea Crude: UP 0.1 percent at $82.89 per barrel
West Texas Intermediate: DOWN 0.1 percent at $78.65 per barrel
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