Markets Mixed on China’s Slower GDP Growth Rate

  • Market Overview

Markets in China closed lower on Tuesday after their latest GDP growth rate showed that the country’s economy only expanded by 3% in 2022, well below the 5.50% target from the government. The world’s second-largest economy experienced a turbulent year with a resurgence of Covid cases throughout 2022. The 3% growth rate is the slowest in 45 years. On a quarterly basis, the economy showed no growth in the fourth quarter, following a 3.90% expansion in the previous three-month period. On the flip side, the country’s unemployment rate declined to 5.50% in December 2022 following the relaxation of some more stringent Covid restrictions. In Japan, the Nikkei closed 1.23% higher on Tuesday, despite a slight yen downturn, as investors await the Bank of Japan's (BoJ) monetary policy decision due today.

The FTSE/JSE All Share Index retreated on Tuesday, weighed down by China’s weak GDP growth data. The power utility moved the country to stage 5 yesterday, however, the long-term power outlook remains gloomy. At the World Economic Forum, Finance Minister Enoch Godongwana stated that the government has a strategy for improving energy availability that will eliminate the necessity for any power outages within the next 12 to 18 months. On the data front, local mining production fell by 9% y/y in November 2022, following an upwardly revised 11% decline in the previous month and worse than market predictions of a near 7% decline. The rand weakened to R17.10 against the USD at 23h30.

European markets were mixed on Tuesday with London’s FTSE 100 dragged down by financials and consumer discretionary counters. While the DAX and CAC40 closed in the green. In economic news, Germany’s ZEW economic data revealed that investor confidence improved in January 2023 for the first time in almost a year, and the country's consumer price report indicated that prices eased in December 2022. In the UK, the labour market remained tight at 3.70% in November 2022.

After being closed on Monday for Martin Luther King Jr. Day, Wall Street was somewhat mixed on the first day of trade for the week on Tuesday. The Dow Jones was the biggest loser, weakening to 1.14% at 23h50, weighed down by disappointing earnings from Goldman Sachs (NYSE: GS ). While the S&P 500 was down 0.20%, the tech-heavy Nasdaq was up 0.14%.

In your commodities, Brent crude was trading at $85 a barrel, while gold was trading at $1 908 an ounce at 00h00 local time.

PSG Wealth Daily Investment Update, 18 January 2023

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