Stocks to rise as Chinese economy outperforms

(Alliance News) - Stocks in London are set to start higher on Tuesday, as data pointed to a stronger-than-expected rebound in China's economy.

IG says futures indicate the FTSE 100 index of large-caps to open up 15.5 points, 0.2%, at 7,895.01 on Tuesday. The FTSE 100 index edged up 7.60 points, or 0.1%, at 7,879.51 on Monday.

Market focus on Tuesday morning was on the latest economic data from Asia's largest economy.

China's economy grew 4.5% year-on-year in the first quarter, ahead of FXStreet-cited market consensus of 4.0%, rebounding after the end of zero-Covid measures late last year, according to data published by the National Bureau of Statistics. In the previous quarter, annual growth was just 2.4%.

The figures were the first snapshot since 2019 of a Chinese economy – the world's second-largest – unencumbered by the strict health measures that helped keep the coronavirus in check but battered businesses and supply chains.

"This is a better-than-expected data report. We expect that the government will hold back extra stimulus plans and the yuan should strengthen," said ING analysts. "The main reason for the faster-than-expected growth was much stronger growth in retail sales...mainly boosted by catering."

China's retail sales, the main indicator of household consumption, were up 11% year-on-year in March, the biggest bounce since June 2021, accelerating from a 3.5% increase in February. It was higher than FXStreet-cited consensus of 7.4%.

Meanwhile, industrial production in March climbed 3.9% year-on-year, slightly below consensus of 4.0%, but faster than 2.4% in the previous month.

Despite the positive data, equities trading in Asia was mixed on Tuesday. In Tokyo, the Nikkei 225 index was up 0.4%. In China, the Shanghai Composite was up 0.1%, while the Hang Seng index in Hong Kong was down 0.7%. The S&P/ASX 200 in Sydney was down 0.4%.

The dollar was slightly weaker in early exchanges in Europe.

Sterling was quoted at USD1.23888 early Tuesday, higher than USD1.2364 at the London equities close on Monday. The euro traded at USD1.0940, higher than USD1.0919. Against the yen, the dollar was quoted at JPY134.36, down versus JPY134.49.

New York ended in the green on Monday after a see-saw session, with the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite all closing up 0.3%.

"Investors remain on guard ahead of a flurry of earnings results expected across the economy this week," noted Stephen Innes, SPI Asset Management.

In the US on Tuesday, there will be results from Goldman Sachs and Bank of America. Away from the banking sector, pharmaceutical and consumer goods firm Johnson & Johnson and streaming service Netflix release quarterly earnings.

Gold was quoted at USD1,999.22 an ounce early Tuesday in London, higher than USD1,990.71 late Monday. Brent oil was trading at USD84.91 a barrel, flat on USD84.99.

In Tuesday's economic calendar, there is a UK unemployment reading at 0700 BST and the latest German ZEW economic sentiment reading at 1000 BST.

The UK corporate calendar has trading statements from budget carrier easyJet and Ladbrokes betting shops owner Entain. Following yesterday's announcement of a private equity takeover proposal, e-commerce platform THG reports annual results.

By Elizabeth Winter, Alliance News senior markets reporter

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