Stock markets subdued despite strong growth data from China

Stock markets subdued despite strong growth data from China

Tuesday, January 19, 2021

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LONDON, England (AP) — Stock markets got off to a slow start for the week despite news that the Chinese economy grew 2.3 per cent in 2020 after a sharp contraction early in the year.

Shares fell in London and Tokyo yesterday but advanced in Hong Kong, Paris and Shanghai. Most US markets were closed for the national holiday.

Investors appeared to have grown increasingly wary over the deepening economic devastation from the pandemic despite hopes that COVID-19 vaccines and fresh aid for the US economy might hasten a global recovery.

In Britain, the Financial Times Stock Exchange (FTSE) 100 Index dropped 0.2 per cent to close the day at 6,720.65. Germany's DAX edged 0.4 per cent higher to 13,848.35 and the CAC 40 in Paris rose 0.1 per cent to 5,617.27.

China was the first country to suffer outbreaks of the new coronavirus and the first major economy to begin recovering, while the US, Europe and Japan are struggling with outbreaks.

The National Bureau of Statistics said growth in the three months ending in December rose to 6.5 per cent over a year earlier, up from the previous quarter's 4.9 per cent. The economy contracted at a 6.8 per cent pace in the first quarter of 2020 as the country fought the pandemic with shutdowns and other restrictions.

Some measures showed a slowing of activity in December, but “the big picture is still that activity remains strong, which is helping to support the labour market”, Stephen Innes of Axi said in a commentary.

The Hang Seng in Hong Kong gained 1 per cent to 28,862.77, while the Shanghai Composite index climbed 0.8 per cent to 3,596.22.

But gloom prevailed in other major regional markets. Tokyo's Nikkei 225 dropped 1 per cent to 28,242.21 and the Kospi in South Korea lost 2.3 per cent to 3,013.93. Australia's S&P/ASX 200 declined 0.8 per cent to 6,663.00. Shares fell in Southeast Asia and Taiwan.

On Friday, the S&P 500 fell 0.7 per cent to 3,768.25, with stocks of companies that most need a healthier economy taking some of the sharpest losses. It lost 1.5 per cent for the week. The Dow Jones Industrial Average lost 0.6 per cent to 30,814.26, and the Nasdaq composite dropped 0.9 per cent to 12,998.50.

Treasury yields have been climbing on expectations the US Government will borrow much more to pay for the additional stimulus proposed by President-elect Joe Biden, in addition to improved economic growth and higher inflation. The yield on the 10-year Treasury zoomed above 1 per cent last week for the first time since last spring and briefly topped 1.18 per cent this week.

In other trading, benchmark US crude oil lost US12 cents to fall to US$52.24 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, shed 20 cents to fall to US$54.90 per barrel.

The US dollar was trading at 103.67 Japanese yen to US$1, down from 103.88 yen on Friday. The euro slipped to US$1.2076 from US$1.2078.

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