Chinese growth slumped to its slowest rate of annual growth in almost three decades, sending shares in the region higher on optimism the government will deploy fresh stimulus to shore up the economy.
The Chinese economy grew by 6.6% over a year earlier, down from 2017’s 6.9%, official data suggested on Monday, marking the lowest annual increase in GDP since 1990, when the country was hit by international sanctions in the aftermath of the Tianamen Square Massacre.
“The market’s positive reaction to the data comes from growing hopes of further stimulus from Beijing,” Jasper Lawler, head of research at London Capital Group wrote in an email. “The economy is slowing, the markets know that. However, they expect Beijing to act with more supportive policies.”
On a quarterly basis, growth was its slowest since the first quarter of 2009, as the global financial crisis was unfolding. According to China’s National Bureau of Statistics, GDP grew by 6.4% compared to a year earlier.
“Should data continue to worsen going forwards, then we could start to see increased pressure on riskier assets, not just in Asia, but globally; as fears for the global market grow,” Lawler said.
Outside Asia stocks are somewhat less positive, with European stocks losing ground.
US stock markets are closed for the Martin Luther King holiday.
Here’s what is going on across global markets as of 10.00 a.m. GMT (5.00 a.m. ET):
- All major Chinese indexes gained at least some ground Monday, with both the Shenzhen Component and China A50 up around 0.6%. The Shanghai Composite, the country’s benchmark index, was 0.6% higher.
- Elsewhere in Asia, Japan’s Nikkei 225 ended the day 0.3% in the green, while South Korea’s KOSPI was flat, up just 0.02%.
- Moving to Europe, virtually all major indexes on the continent have seen marginal losses in the first hour of the week, with Italy’s FTSE MIB, down 0.8%, the biggest loser. The Euro Stoxx 50 broad index is down 0.3%.
- Meanwhile, Britain’s FTSE 100 has gained a small amount of ground, benefitting from a slump in the pound, which has helped push the FTSE up 0.2%.