17th Jan 2025 07:48
(Alliance News) - Stocks were called to open higher on Friday after China recorded one of its slowest rates of economic growth in decades last year, despite outperforming consensus in the fourth quarter.
China's economy grew 5% last year, lower than the 5.2% recorded in 2023, but in the final quarter it rose 5.4% and outpaced expectations of 5% growth.
However, Pepperstone's Dilin Wu said the overall data "has significantly exceeded expectations, with notable improvements in both consumer activity and industrial performance" which have helped to "bolster confidence in China's economic outlook", despite retail sales growth of 3.5% significantly slowing from the 7.2% growth seen in 2023.
On the other hand, Wu added that "uncertainties remain regarding China's future economic trajectory" with December's CPI data showing "ongoing deflation", "unemployment showing a slight uptick", and the fact that "China's exports—vital to the economy—remain highly sensitive to Trump's tariff policies".
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: called up 76.1 points, 0.9% at 8,468.00
----------
Hang Seng: up 0.3% at 19,587.64
Nikkei 225: closed down 0.3% at 38,451.46
S&P/ASX 200: closed down 0.2% at 8,310.40
----------
DJIA: closed down 68.42 points, 0.2%, at 43,153.13
S&P 500: closed down 0.2% at 5,937.34
Nasdaq Composite: closed down 0.9% at 19,338.29
----------
EUR: lower at USD1.0279 (USD1.0305)
GBP: lower at USD1.2170 (USD1.2241)
USD: higher at JPY155.72 (JPY155.19)
Gold: lower at USD2,711.88 per ounce (USD2,719.78)
(Brent): higher at USD80.89 a barrel (USD79.90)
(changes since previous London equities close)
----------
ECONOMICS
----------
Friday's key economic events still to come:
10:00 CET eurozone current account
11:00 CET eurozone CPI
07:00 GMT UK retail sales
08:30 EST US building permits
09:15 EST US industrial production
----------
UK retail sales declined on-month in December and significantly missed the consensus estimates, figures from the Office for National Statistics showed. Retail sales volumes decreased 0.3% month-on-month in December, worsening from 0.1% growth in November and falling far short of the FXStreet-cited market consensus of 0.4% growth. On an annual basis, retail sales grew 3.6% in December. This missed the FXStreet consensus of 4.2%, but represented an acceleration from no change in the year to November. Notably, November's figure was downwardly revised from a previously reported 0.5% increase. Excluding fuel, retail sales declined 0.6% on-month compared to November's 0.1%, missing consensus which anticipated 0.1% growth again. Annually, sales excluding fuel rose 2.9% and improved from the November 0.5% decline, but fell short of consensus estimate of 3.6% growth.
----------
China recorded one of its slowest rates of economic growth in decades last year, as leaders nervously eye a potential trade standoff with incoming US president Donald Trump. The economy grew 5% last year, official data from Beijing's National Bureau of Statistics showed, slightly above the 4.9% forecast in an AFP survey of analysts. Still, the figure was lower than the 5.2% recorded in 2023. The growth occurred in the face of a "complicated and severe environment with increasing external pressures and internal difficulties", the NBS said. Retail sales, a key gauge of consumer sentiment, rose 3.5% – a major slump from the 7.2% growth seen in 2023 – though industrial output increased 5.8%, from 4.6% the previous year. However, the 5.4% jump in economic growth seen in the final four months far outpaced the 5% forecast in a Bloomberg survey and was much better than the same period in 2023. The GDP growth rate is the lowest recorded by China since 1990, excluding the financially tumultuous years of the Covid-19 pandemic. Moreover, analysts surveyed by AFP estimated that growth could fall to just 4.4% in 2025, and even drop below 4% the following year.
----------
Global growth should remain stable this year and next, but at recent historic lows, the World Bank said. Growth should hit 2.7% in 2025 and 2026, in line with the level reached last year, the World Bank announced in a new report, adding that inflation and interest rates should "decline gradually" over this period. "Growth in developing economies is also expected to hold steady at about 4% over the next two years," the Bank said, noting that this was a weaker performance than before the Covid-19 pandemic. Growth at this level would be "insufficient to foster the progress necessary to alleviate poverty and achieve wider development goals," it added. "Most of the forces that once aided their rise have dissipated," World Bank chief economist Indermit Gill said in a statement, referring to the world's developing economies. "In their place have come daunting headwinds: high debt burdens, weak investment and productivity growth, and the rising costs of climate change," he added.
----------
Rachel Reeves has urged regulators to "tear down" red tape in a bid for stronger economic growth. The under-pressure UK chancellor and the Business secretary met with bosses of watchdogs covering the railways, water, energy, and aviation sectors on Thursday. She told the bosses that they must "tear down regulatory barriers" to support business investment and innovation to boost the UK's growth prospects. It came after fresh data from the Office for National Statistics showed that the UK economy grew by a weaker-than-expected 0.1% in November.
----------
BROKER RATING CHANGES
----------
Berenberg cuts Rio Tinto price target to 6,300 (6,400) pence - 'buy'
----------
Jefferies cuts Safestore price target to 728 (803) pence - 'hold'
----------
Peel Hunt cuts Wise to 'add' (buy) - price target 1,100 (1,000) pence
----------
COMPANIES - FTSE 100
----------
AstraZeneca announced that Calquence plus chemoimmunotherapy has been approved in the US to treat adult patients with previously untreated mantle cell lymphoma who are ineligible for autologous hematopoietic stem cell transplantation. The approval was granted by the Food & Drug Administration after Astra secured priority review for the drug, and was based on results from the Echo phase 3 trial which were presented at the European Hematology Association 2024 Congress. The trial found that when censored for Covid-19 deaths, progression-free survival improved in both arms, with the Calquence combination reducing the risk of disease progression or death by 36%.
----------
COMPANIES - FTSE 250
----------
Spirent Communications, whose planned takeover by Keysight is being scrutinised by the UK Competition & Markets Authority, said its fourth quarter saw a strong uptick of order growth on the same period in 2023. Full-year revenue decreased to USD460 million from USD474 million, but second-half and fourth-quarter revenue rose 5% and signalled recovery in orders. "We returned to growth in North America and EMEA supported by good progress in customer diversification. This offset a reduction in China," Spirent said. "Looking ahead, in Asia we expect to increase our focus on growing our customer base in various geographies, including Japan and India, where we expect to make more progress as we enter the new financial year."
----------
OTHER COMPANIES
----------
Winking Studios announced its proposed conditional acquisition of Shanghai Mineloader Digital Technology, "one of Asia's leading game art outsourcing and development studios". Consideration totals approximately CNY146 million, or GBP16.3 million, including an upfront payment of around CNY131.4 million. The remaining balance would be paid five years after completion. "The proposed acquisition is expected to deliver increased scale across Asia, new Western clients, and increased resources to deliver on the group's global ambitions," Winking said. It expects to complete the deal before the end of the second quarter of 2025.
----------
By Emma Curzon, Alliance News reporter
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.