LONDON MARKET EARLY CALL: Weak open seen as China GDP falls short

(Alliance News) - Stock prices in London are seen opening a touch lower on Monday, while Asian ...

Alliance News 18 October, 2021 | 6:53AM
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(Alliance News) - Stock prices in London are seen opening a touch lower on Monday, while Asian equities started the week on the back foot as data from China showed growth at the world's number two economy has slowed.

IG futures indicate the FTSE 100 index is to open 4.0 points lower at 7,203.03. The blue-chip index closed up 26.32 points, 0.4%, at 7,234.03 on Friday.

The Japanese Nikkei 225 index is 0.2% lower. In China, the Shanghai Composite is 0.4% lower, while the Hang Seng index in Hong Kong is down 0.5%. The S&P/ASX 200 in Sydney closed up 0.3%.

"Markets in Asia have got off to a shaky start, with the main attention on this morning's disappointing China Q3 GDP, and retail sales and industrial production data for September," CMC Markets analyst Michael Hewson commented.

China's economic growth slowed by more than expected in the third quarter, official data showed, as the property sector struggled with tighter policy measures and an energy crisis loomed.

After a swift coronavirus bounce back, recovery in the world's second-biggest economy is losing steam, with gross domestic product growth coming in at 4.9% on-year, said the National Bureau of Statistics, citing an "unstable and uneven" domestic rebound.

Growth undershot expectations of a 5.2% hike, according to consensus cited by FXStreet. It followed a 7.9% expansion in the second quarter.

Industrial production growth slowed further to 3.1% on-year in September, but retail sales picked up to 4.4% annually – markedly improving from 2.5% in August – with fewer virus containment measures in the country, which has imposed swift local lockdowns over a handful of cases.

Retail sales topped expectations of 3.3% growth, while industrial production missed forecasts of a 4.5% hike.

"We think the electricity shortages and production cuts will become less of a problem later in Q4. In line with our expectation, senior policymakers have started to stress growth, and we expect them to call for the pursuit of climate targets on a more measured timeline. But the real estate downturn should weigh substantially on Q4's growth," Oxford Economics analyst Tommy Wu commented.

The dollar was high early on Monday.

The pound was quoted at USD1.3728 early Monday in London, fading from USD1.3780 at the London equity market close on Friday. The euro stood at USD1.1580, down from USD1.1603. Against the yen, the dollar was trading at JPY114.31, up from JPY114.17.

Brent oil was quoted at USD85.80 a barrel early Monday, improved from USD84.73 late Friday. Gold stood at USD1,767.82 an ounce, down from USD1,773.75.

The UK corporate calendar on Monday has a trading statement from fund manager Schroders.

In the US on Friday, Wall Street ended higher, with the Dow Jones Industrial Average up 1.1%, the S&P 500 rising 0.8% and the Nasdaq Composite adding 0.5%.

By Eric Cunha; ericcunha@alliancenews.com

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